First time buyers to continue renting for two extra years

The homebuying dream for first-time buyers (FTBs) has been delayed by nearly two years due to the cost-of-living crisis, research reveals.

This means that most of those trying to save for a home of their own will have to continue renting.

Aldermore’s latest First Time Buyer Index questioned 2,000 prospective first-time buyers and found that many are struggling to secure a mortgage due to the impact of the current cost-of-living crisis and rising inflation eroding their finances.

On average, prospective first-time buyers plan to save £43,500 for a deposit.

First-time buyers in London and the South East expect to save the most at £52,777 and £54,570 respectively, with Yorkshire buyers expected to save nearly half of that (£27,379) on average.

First-time buyers struggling to save for a deposit

However, when it comes to first-time buyers struggling to save for a deposit, some have criticised these would-be home buyers for failing to make sacrifices or cut costs to reach their deposit goals.

Aldermore has looked at the issue and, using the Nationwide deposit average of £43,500, they say the money needed for a deposit would equate to:

• 7,250 portions of smashed avocado on toast
• 3,702 Uber rides
• 72 months’ rent
• 1,087 months’ gym membership
• 1,366 Ryanair flights.

While half of prospective first-time buyers (51%) are utilising savings accounts to save for a deposit that typically offer higher rates of interest, a concerning number of them are holding their savings in low-interest savings vehicles.

Two out of five (44%) are using current accounts, despite the current high-inflation environment eroding the real-term value of these savings.

Relying on cryptocurrency to generate deposit funds

Additionally, nearly one in 10 (8%) are relying on cryptocurrency to generate deposit funds, despite its considerable volatility.

The rising living costs have become a greater barrier to purchasing a home, with seven out of 10 (72%) prospective first-time buyers being impacted by the ongoing crisis.

This has delayed a third (32%) from buying a property and realising their homebuying dreams, with delays of 20 months on average.

Nearly two-thirds of all first-time buyer hopefuls have had to scale back their regular savings (64%), likely increasing the time it takes to get on the property ladder, while one in five (19%) have had to opt for looking for a cheaper home.

‘Difficulties are ultimately worth it to get on the property ladder’

Jon Cooper, the head of mortgage distribution at Aldermore, said: “While saving in this current economic climate may feel like a long and arduous journey, we’ve found that the majority of determined first-time buyers think the difficulties are ultimately worth it to get on the property ladder.

“It’s important that prospective buyers are aware of the support available to them.”

He added: “Would-be buyers should consider seeking advice from a broker who can lend a helping hand and guide you through the process of becoming a homeowner.”