A recent article published on home buying website reallymoving.com has thrown a spotlight on how much is needed by way of a deposit for a first time house purchase.
Reallymoving.com suggest that giving up luxuries such as lattes and avocado toast and putting the savings towards a home won’t get buyers very far. With an average first home in the UK costing £219,660, they estimate that 21,749 avocados would need to be foregone.
Their First Time Buyer Deposit Savings Generator calculates the amount of extravagances potential purchasers would need to give up to buy in their chosen region of the UK. For example, a 10% deposit for a property in the North West would need a saving of 6,409 lattes, while in the South East it would take 7,253 glasses of wine.
As well as being a bit of fun, the generator offers some more realistic tips for saving. With a typical 10% first time deposit being between £12,500 in the North East and £27,500 in the South East, those serious about buying need to focus on substantial regular savings.
Cutting out luxuries will help, particularly larger expenses such as restaurant meals, but closely examining all areas of expenditure will be more useful.
Money saving’s website suggests that only continual and noticeable changes such as switching to better priced contracts for mobiles or utilities will make the necessary difference in helping to save for a deposit. The biggest gains are in areas such as rent; savers sacrificing their own space and rental home is considered as the best way to save the desperately needed money on a larger scale. Moving back in with family is a great way to save if it’s an option. If not, maybe there’s a second bedroom that could be rented out, subject to the landlord’s agreement, or a move made to a rented room rather than leasing a whole property.
The report also claims that many consider a second job in order to also bump savings up quickly, particularly if there are two people working. The biggest areas of saving aren’t always much fun, but for those serious about buying their own home in an expensive and sluggish market, the report suggests that sacrifices might be necessary.
Creating a list of likely expenses is a good idea. It’s not just the deposit that will be needed, but also a survey, conveyancing fees, moving costs and a cushion for unexpected expenditure or essentials that might be needed in the new home.
Rob Houghton, Reallymoving.com’s CEO, explains: “Saving a deposit is without doubt the greatest challenge when buying a first home and this research highlights how unhelpful it is to suggest that millennials only need to be willing to sacrifice a few luxuries such as takeaway coffees and gym memberships, to get on the housing ladder.
“While small changes can add up, we urge first time buyers making New Year Resolutions on the first of January this year to look at the bigger picture, make decisions such as moving back in with parents or downsizing, opening an Help to Buy ISA and paying in a fixed amount each month, or setting up a money saving app on their devices, to help monitor spending and saving.
“Our First Time Buyer Deposit Savings Generator is a fun tool designed to help first time buyers challenge any suggestion that saving for a deposit is easy, alongside a range of free resources to help them actually achieve their goal.”
Simon Bath, CEO of When You Move comments: “In some ways it is reassuring to see that so many young people are still looking to get on the property ladder despite the costs associated with a home purchase. For professionals in the property arena, this is an excellent opportunity to ensure that their portfolios are as accessible as possible to the new generation of homebuyers. Schemes such as Help to Buy and Shared Ownership have done this to a great extent, but the industry as a whole needs to be seen as aiding the most important transaction of their lives.
“One of the ways in which this can be done is through price transparency throughout the property transaction, ensuring that homebuyers are aware of the full extent of costs associated with their legal costs and the fees charged by the surveyor, before their services are engaged. Knowing these costs upfront ensures that first time buyers can budget and save adequately. Digitalisation in the home buying and selling process is also key for delivering a consumer focused service.”
What is your top tip for big savings? Despite the amount of help offered to FTBs, should more be done to help avoid putting too much pressure during the saving process?
One Response
As a country we are just not rich enough to afford to buy homes at current prices.
Price control has to be considered.