Yahoo Finance London first-time buyers need to save for almost nine years to get on the housing ladder
It would take a single person just under nine years to save enough money to attempt to get onto the London housing ladder, according to a new report.
Comparison site Reallymoving analysed data from conveyancing quote forms submitted by 35,000 first-time buyers (FTB) in the UK.
In London, with an average FTB house price of £425,000 (the stamp duty relief limit), they estimate you’d need a £42,500 deposit – plus an extra £2,512 to cover the extra costs of buying a house.
Reallymoving suggested saving £1,620 for conveyancing, £520 for a survey, and £372 for a removal service.
With a total cost of £45,012, it would take putting 10 per cent of the average London salary aside each month for 104 months.
And that is assuming that for the entire period you are earning at least £51,948 — the mean gross income in London according to the 2023 Labour Force Survey from the Office of National Statistics.
It would take a London FTB twice as long to save for their first home compared to someone in the north east of England, where Rellymoving estimated it would take 55 months to save the requisite £14,962 on a local average salary.If a FTB could find a romantic partner, friend or sibling also earning the average wage to buy with they could, of course, halve this time.
“With the cost of living in London, and rents, still so high, putting money aside every month is extremely difficult,” said Reallymoving CEO Rob Houghton.
Young Londoners on low incomes currently spend up to 77 per cent of their earnings on housing costs.
“Clearly tackling access to home ownership is not a top priority for the Conservative Government, with no support whatsoever for first-time buyers in the Spring Budget,” added Houghton.
“We can only hope that as the parties publish their manifestos in the run up to the general election, we will finally see meaningful action to increase housing supply, including social housing, which would filter through to lower house price inflation for the rest of the market.”
Reallymoving highlighted that putting savings into a Lifetime ISA could potentially shave 21 months off a London first-time buyer’s saving process, bringing it down to seven years.
As a tax-free savings account, a Lifetime Isa allows first-time buyers to save £4,000 a year towards their first home, with a 25 per cent top-up from the government of up to £1,000 a year.
However, in London the cap for the Lifetime Isa is a house price of £450,000 — well below the average price of a house in the capital.
Purchasing a house above this price would incur a harsh financial penalty.
A recent report from personal finance site Finder.com found that four out of five London boroughs will be priced out of the Lifetime Isa cap by 2028.
Only Barking and Dagenham, Bexley, Croydon, Havering, Hillingdon and Sutton would still have an average priced house obtainable for a first-time buyer saving for their deposit with this method and hoping to buy in four years’ time.
