The average deposit that first-time buyers need to get onto the property ladder is expected to rise to more than £80,000 in the next 10 years.
For those living in London, the amount required will reach more than three times that amount at an eye-watering £245,000, according to the research by mortgage brokers L&C Mortgages.
It is the latest evidence of the extreme financial pressures placed on those wanting to buy their own home – and the mortgage broker created an interactive map that shows how the UK will be affected.
The average deposit for first-time buyers across the UK currently stands at £51,821, it said.
The average deposit that first-time buyers need to get onto the property ladder is expected to rise to more than £80,000 in the next 10 years
The data looked at some of the largest cities around the country, with the deposit required for those looking to buy in Brighton and Hove potentially reaching £125,280 within 10 years, compared to £77,407 now.
For those in Bristol, it could reach £92,000 from £58,035, while for those in Norwich and Edinburgh, the average level may reach £63,364 and £58,204, from £40,890 and £37,661, respectively.
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David Hollingworth, of L&C, said: ‘First-time buyers could be forgiven for giving up hope of owning their first home.
‘There is some stark variation between cities but the fact that London deposits could be almost hitting a quarter of a million pounds by 2027 is alarming.’
|UK cities||Deposit needed today||Deposit needed 2022||Deposit needed 2027||Total % increase by 2027|
|Brighton and Hove||£77,407||£100,032||£125,280||62%|
|Newcastle upon Tyne||£26,037||£31,826||£38,046||46%|
|Source: L&C Mortgages|
The average deposit for first-time buyers is expected to rise to more than £80,000 in 10 years, according to new research
The research looked at how house prices in some of Britain’s largest cities had changed in the past 20 years.
It used the gap between this data and the level of mortgage borrowing to determine the average deposit paid by first-time buyers.
It then applied these historical rises in deposit levels to the next 10 years to forecast how much of a deposit first-time buyers might require in the future.
Some of the figures – particularly in the capital – may seem high, but Mr Hollingworth explained how it is unlikely 10 years ago that many buyers would have thought that the levels of deposit required today.
Mr Hollingworth said: ‘Pulling together a deposit continues to represent one of the single biggest challenges and these forecast will make frightening reading for aspiring first-time buyers.
‘As result, the bank of Mum and Dad will do doubt continue to play an important role for those attempting to get on the ladder.’
First-time buyers can also now benefit from the Chancellor’s decision in last month’s Budget to scrap stamp duty on first homes worth up to £300,000.
This will save them up to a maximum of £5,000 and abolishes stamp duty below £300,000 for any home costing up to £5,000.
It’s a bargain! This one-bed flat in London’s Beckenham has an asking price of £165,000, which is marginally more than the average £139,987 deposit required to buy in the capital
L&C went on to examine the attitudes of first-time buyers and found that their perception of how much of a deposit they will require in the next 10 years is much lower than the findings in its research.
It suggests that first-time buyers are dramatically underestimating how much of a deposit they will need to get onto the property ladder.
It found that these borrowers thought they would only need £35,402 on average for a deposit to buy a property in the next 10 years – and that they had only saved £16,436 towards this goal. It contrasts to the research findings that the average deposit could be £81,468 within 10 years.
It leaves a large shortfall between what they have saved and what the broker predicts they will need to buy a property in the future.
Although there are mortgage deals available to those with smaller deposits of as little as 5 per cent of the purchase price of a property, rates on these types of deals are higher than for those with a larger deposit.