First-time buyers “need £29,000”

24 August 2006

A new survey suggests that the average couple needs to save at least £29,000 to pay for the deposit and stamp duty on their first home. The study, from the Royal Institution of Chartered Surveyors (RICS), notes that house prices have risen by 184% since 1995 – that’s three times faster than take-home pay.

RICS says house prices have been driven higher by the combination of a stable economy, low interest and mortgage rates, high levels of employment and an insufficient number of new houses being built. It says young people will continue to find it difficult to get into the housing market unless more new houses are built.

Earlier this month, the Council of Mortgage Lenders reported that in June, the average first-time buyer was paying 3.21 times their income to secure a mortgage; the highest figure on record.

But despite the high levels of borrowing needed, the number of first-time buyers taking out new mortgages went up in June to 39,500 – the highest number since December 2002. That increase is being put down to parents increasingly helping their children to get onto the property ladder. The Alliance & Leicester estimates that parents are contributing an average of almost £18,000 to help their offspring secure a mortgage. Research by another mortgage lender, the Bradford & Bingley, suggests that 40% of first-time buyers rely on their parents for financial help when buying a home.