Property Deposit for First Time Buyers

First-time buyers have to save almost half their monthly wage for five years if they want to get a foot on the housing ladder, a report published by the Home Builders Federation showed on Thursday, reports Reuters

According to its "Broken Ladder" report, first-time buyers in their 20s would have to save 45 percent of their monthly net income over five years to afford the 37,000 pound deposit needed to buy an average starter home.

In London and the South East, the figure climbs to almost 60 percent of net income.

A lack of affordable homes and limited access to mortgage financing are shutting young people out of the property market, where the average deposit for a house is 230 percent of average salary, the report says.

Property prices rose for the first time in four months in October while mortgage approvals dropped to their lowest levels in seven months in September, as banks remained reluctant to lend due to higher-than-expected funding costs.

All housebuilders, including Persimmon, Barratt Developments, Taylor Wimpey and Bellway, are exposed to the drought in the first-time buyer market.

Housebuilders have offered incentives, such as shared equity schemes, since the recession to help first-time buyers, but the scrapping of the government's HomeBuy Direct scheme at the end of September dealt a further blow to the market.

The high cost of private rents and utility bills is further crimping young people's ability to save for a house.

According to the report, those aged 22-29 saving for a deposit would have only 13 percent of their monthly wage left to cover bills and living costs.