Rising Costs and Sacrifices for First-Time Home Buyers
First-time home buyers have always had to make compromises to save up for a deposit, whether it’s choosing staycations over holidays or cooking at home instead of dining out. However, the current financial climate has pushed many to even greater lengths, with some now cutting back on essential expenses like food and selling personal items to afford their first home.
According to a survey by comparison website MoneySuperMarket, a quarter of those saving for a deposit have reduced their food purchases to save tens of thousands of pounds. Similarly, an equal number have sold possessions to help fund their dream home. The research highlights how challenging it is for first-time buyers to accumulate the necessary funds, especially given the rising costs of housing.
The typical first-time buyer household would need to save £500 per month for five years to build a 10% deposit for the average home. This figure is based on data from the Household Money Index, which surveyed 8,000 households, including around 1,750 renters.
The high cost of home ownership is also leading one in ten prospective buyers to move back in with their families to cut down on expenses. This trend reflects the growing difficulty for younger generations to afford their own homes, as the average property price is 8.5 times the average salary, according to analysis by estate agent Yopa.
The average home in Britain now costs £273,000, according to the latest Office for National Statistics figures. To put down a 10% deposit, a first-time buyer would need £27,000, plus additional funds for legal fees and moving costs. With rental prices climbing, it’s becoming even harder for people to set aside money for a deposit.
Advertised rents reached record highs between July and September, according to property portal Rightmove. Across the country, excluding London, tenants pay an average of £1,385 per month, while in London, the cost is as high as £2,736. These figures show how difficult it is for many to save enough for a home.
Three out of five people who do not own their own property feel trapped in a cycle of renting, as building a deposit and meeting lender criteria seem unrealistic. The MoneySuperMarket report reveals that a £500 monthly savings plan over five years is needed for most first-time buyers to reach their goal.
However, for those buying more expensive homes or aiming for a larger deposit to access better mortgage rates, an £800 monthly savings plan is required. Eighty-four percent of respondents have cut their spending to meet these targets, with some taking drastic steps.
Twenty-six percent of those saving for a home have reduced their weekly food shopping, while 25% have sold personal items. Additionally, 31% have cut back on spending for Christmas and birthdays. Many are also switching to better deals on energy and broadband services.
Comparing deals across providers can help save money, even when not saving for a home. Many companies offer similar services at lower prices. For example, This is Money provides regularly updated guides to find the best energy deals.
Kara Gammell, from MoneySuperMarket, said: 'For young families hoping to buy their first home, getting the best deals to stretch their money further has never been more important. It makes a significant difference to monthly savings.'