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(EstateNewsWire.com, February 23, 2013 ) Leeds, U.K -- A report into Britain's new “locked-out generation” has revealed that young people must now save for over a decade before they can afford to buy their first home.
The report has warned that the situation is even worse in London, where the average young person in his/her 20s is forced to save for nearly 24 years in order to raise the deposit for a first home.
The news comes at a time when a large majority of first-time buyers who get into the housing ladder are only successful because their parents assisted with the first purchase.
The report was published by the Home Builders' Federation, and the group warns:
We are creating a locked-out generation. In England, it says the average person between the age of 22 and 29 has a monthly income after tax of £1,274, but most of this money must be spent on rent, council tax and utility bills.”
That means that after bills are paid, an individual is left with £557, according to their numbers.
For those who are able to save half of the remaining income, which is highly unlikely given the amount of bills that have to be paid, it would take 126 months to save a deposit.
The report must assume that they put down 20% on the average first-time buyer's home, meaning a £35,000 deposit on a property costing £175,000. Within London, the numbers rise to 289 months, with a 20% deposit being £60,000 for a £292,000. While wages tend to be higher in the capital, the cost of fees and bills are also higher overall.
The calculations for the finding assumes that both salary and housing prices do not rise through the period of saving. Stewart Baseley, who is executive chairman of the Home Builders Federation, stated:
“The report reveals the extent of our housing crisis and the challenge faced by today’s young people,” he said. “Unlike previous generations that took homeownership for granted, today’s generation have a mountain to climb if they wish to own their own home.”
The report also highlights how the financial pressure of the first-time buyer has ballooned to levels that likely mean few in the middle-class will be able to afford homes. The lowest class has almost no opportunity to purchase a home.
Currently there are only 200,000 per year who are considered first-time buyers, down from 500,000 a decade ago. Within the last week, official figures noted that England has experienced a collapse to the lowest levels since 1988, while millions are frozen in the property ladder.
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