It really feels a lot harder to get on the property ladder these days. There’s a reason for this… it is! The average age for a first-time buyer is now 30 years old, which is 7 years older than it used to be back in 1960! So, at the age of 23, you could put a deposit of only £565 on your very own home. Of course, that money is valued the same these days. However, that’s the equivalent of £12,782 today. We’d love to be able to purchase a home for that sort of deposit today.
Why is it so difficult to get on the property ladder?
House prices have inflated a great deal over the years, with a disproportionate rate of income. It’s likely now that the deposit you expect to pay on a house could be more than your annual income, even if you don’t pick an expensive area. This means people will have to save for a lot longer, and probably borrow from the bank of mum and dad.
Back when houses were cheaper, many couples would purchase a house, and they would still live in it with their families. However, now the trend is showing that many single people (and couples too) are purchasing a small flat and then upgrading later.
Why young people struggle to buy a home
The whole state of career progression has completely changed in the last couple of decades, with less focus on higher education and traditional jobs. Now, the startup culture is more popular than ever and trendy jobs like becoming an “influencer” is highly sought-after.
With the uncertainty of income and high-flying lifestyle seen in these careers, these individuals can be seen as less “credit-worthy” and are likely to not have a steady savings plan.
How is the government helping first-time buyers?
Some may argue that the government are not helping first-time buyers at all. Instead, it’s more difficult than ever to get a mortgage, especially if we include the reasons above for why millennials are not so credit-worthy these days.
However, the government has introduced several new schemes over the last few years which are destined to help first-time buyers make their way onto the property ladder. Please do check out our article recommending our favourite ISAs out there when trying to save for your first home.
Tips for first-time buyers
So, what should you do if you want to secure your first home? We think that the best way to start is to compare ISAs and take advantage of one of them ASAP, saving the maximum amount of money it allows. Then, have a think about a sensible town to live, which may not necessarily be in the heart of the city. For example, London is one of the most expensive cities in the world at the moment and buying a home there could prove difficult.
However, there are excellent commuter counties, such as Surrey, Kent or Essex, where you will see more bang for your buck.
Definitely start budgeting and cutting back on things you don’t necessarily need. Yes, that means you will have less of a social life, but just think how amazing the house parties will be in your very own home!
If you’re self-employed or in a startup, you may want to save as much as you can now, as your future is never guaranteed. You will also need to prepare financials to prove to the banks that you are credit-worthy, so keep records and get some financial advice so that your chance of getting a decent mortgage is maximised.