It is well documented that saving a deposit for a first home in the UK can take years but now new research shows that prices are so high in some locations that it could take 27 years.
London has the highest average deposits overall in the country with 16 boroughs appearing in the top 20 locations requiring the biggest house deposits relative to average salaries, according to the figures from MoneySuperMarket.
Using data from the Land Registry and the Office of National Statistics (ONS), the research analysed average house prices and average salaries to work out the average required deposit needed to buy a house across 441 local authorities in the UK.
It found that Kensington and Chelsea is the most unaffordable place to live in the UK. House prices are on average £1.3million and an average salaried couple would need a 52% deposit of £688,772 before buying in the area. With the combined salary of a couple living in the borough averaging £147,918, people can expect to wait approximately 23 years before they’ve saved enough to buy a home.
Westminster and Camden are the next most unaffordable places, requiring deposits of £554,996 and £490,738 respectively. In Camden, where the average deposit figure is 56.6% that equates to saving for 27 years, the longest of any area in the UK.
Outside London, South Buckinghamshire, Chiltern and Elmbridge require deposits of over £200,000 and in 93 or 20% of local authority areas the average minimum deposit needed is greater than £50,000, and in 51 it’s over £100,000.
The analysis also revealed that in 75 local authorities, an average salaried couple would need to find more than a 20% deposit to buy an average priced house and in 39 local authorities a couple would need to save more than a 30% deposit. In total, there are 34 local authorities in which it will take prospective home owners 10 years to afford the minimum deposit needed to buy in their borough.
‘As house prices continue to rise, the dream of owning a home becomes harder and harder to reach for so many people,’ said Kevin Mountford, banking expert at MoneySuperMarket.
‘For those who want to take their first steps onto the ladder, reaching the minimum deposit levels required causes serious financial strain and, as our analysis highlights, many might be priced out of their desired area. Similarly, for those who already own their own home but are looking to take that next step up the ladder, the stretch could be a bigger burden than anticipated,’ he explained.
‘It is important to strike a balance when relocating and prospective buyers shouldn’t stretch themselves too far. For those who want to maximise their chances of securing their dream home in their dream area, paying off debts is the best way to start, as existing borrowing will be taken into account by a lender when it comes to applying for, or extending, a mortgage. Reducing the amount you spend each month could also help when it comes to boosting the amount a lender thinks you can afford to borrow,’ he pointed out.