In the current real estate market, it has become increasingly apparent that first-time home buyers are experiencing a substantial financial strain when compared to the previous generation. Recent research has unveiled a striking revelation, indicating that the average first-time buyer now faces a staggering 191 percent increase in costs compared to their counterparts in 1995, even after adjusting for inflation.
This spike in expenses serves as clear evidence of the daunting impact of escalating property prices. The average price paid by today’s first-time buyers stands at £223,554, necessitating a deposit of £33,533 – a sharp contrast to the £38,806 and £5,821 deposit paid by first-time buyers in 1995. These figures underscore the significant financial burden placed upon young buyers in today’s housing market.
Furthermore, the findings of the research indicate that the average price of a first home today is 8.1 times the average earnings, a noteworthy increase from the 4 times earnings observed in the 1990s. These results reflect the grim reality that first-time home buyers are now compelled to take on higher levels of debt in relation to their income, with each passing decade.
The study, conducted by My Home Move Conveyancing, also indicated a notable increase in the borrowing habits of young buyers. In the 1990s, these buyers typically borrowed four times their income. This figure steadily rose to 6.4 in the 2000s and 7.1 in the 2010s. In the current decade, an average house price of £280,660, alongside an average annual salary of £34,637, results in the cost of a home being 8.1 times the average earnings – more than double compared to the 1990s.
Alistair Singer, the Director of My Home Move Conveyancing, emphasized the impact of these trends on first-time buyers and underscored the necessity for financial assistance from their families. He highlighted that only those who receive help from the “bank of mum and dad” are able to afford their first property in the current housing market.
Singer acknowledged the significant struggle faced by today’s first-time buyers, attributing it to the rapid increase in house prices in recent years, coupled with stagnant earnings. He emphasized that the higher mortgage deposit, increased mortgage rates, and stricter lending criteria have made it a tough time for young individuals looking to purchase their first home.
The research also illuminated the broader housing market, revealing that the estimated average UK house price in the 1990s was £60,551, which would equate to £119,189 today after adjusting for inflation. However, the actual average house price today stands significantly higher at £280,660. This substantial increase in property prices has greatly impacted the affordability of housing for young buyers.
To conclude, the findings of the research underscore the challenging circumstances surrounding first-time home buyers in today’s market. The considerable escalation in property prices, combined with stagnant earnings, has made it increasingly difficult for young individuals to purchase their first home without financial support from their parents or loved ones.