First time buyers spend 4 years making sacrifices to save for deposit
A study of more than 1,000 people conducted by Post Office Money revealed that compromises made to lifestyle were the primary way prospective buyers managed to save towards their first home (33%). The average first time buyer (FTB) will spend four years carefully saving towards their deposit and commit to saving almost 20% of their average joint household salary.
The average deposit for first homes in the UK last year was £51,500, according to the Office for National Statistics, and £173,431 in London. Keen FTBs managing to set aside 24% of the value of their property in advance of their purchase, on average. 30% of this is likely to be gathered via family contributions, meaning loved ones will contribute 7% of the overall value of a first-time buyer home on average.
Approximately 70% of this deposit is reached through saving, which equates to over £1,000 in London. In order to reach this monthly goal, FTBs are most willing to compromise on the quality of their lifestyle rather than on their property purchase or the length of time it takes them to save.
•The majority of recent FTBs (92%) commonly sacrifice luxuries such as going on holiday (31%), nights out (30%) or takeaways (26%).
•One in five (22%) move out of their home to save more money, either moving back in with their parents (13%) or downgrading their rental property to something more affordable (9%).
•Recent FTBs also look for ways to boost their income in order to keep up with their deposit goal (84%).
•This includes taking on overtime as part of their existing job (30%), looking for a higher paying role (21%) or taking on additional paid work to boost their income (17%).
However, this combination of sacrifice and fundraising has an impact on prospective buyers over the long-term. One in five recent FTBs admitted that their motivation to save waned over time (21%) and found the time it took them to save frustrating (20%).
This led some to allow themselves a ‘savings holiday’ where they took a break from putting money aside (14%). Some recent FTBs also admitted to dipping into their deposit savings at some point in their journey to fund other areas of their life for (18%), including holidays (23%), special occasions (23%) or even to supplement their day-to-day income on costs like the weekly shop, during difficult periods (23%).