Within a decade, first-time buyers in London could need a deposit of almost £250,000, according to new research.
Analysis conducted by mortgage brokers London & Country, estimated that the average FTB deposit is set to increase by 57 per cent across the UK.
Currently FTBs put down an average deposit of £51,821. If these predictions are correct, this means those trying to get on the property ladder in five years’ time will need a deposit of £65,930, rising to more than £80,000 by 2027.
In parts of the country where property prices are significantly higher, this rate of increase could be far steeper.
The average FTB in London currently needs a deposit of £139,987. But this research estimates that this could rise by 75 per cent over the next 10 years, to £244,842.
Other cities predicted to see steep increases include Brighton and Hove (deposits up by 62 per cent in 10 years), Bristol (up by 59 per cent) Norwich, Edinburgh, Southampton, Cardiff, Manchester and Leeds (all up by at least 50 per cent).
Even in Belfast, the city predicted to have the smallest house prices rises, the deposit needed by FTBs could rise by 41 per cent over this period – jumping from the £29,682 needed today, to £41,755 in 10 years.
L&C’s research also found many would-be property buyers were seriously underestimating the amount they needed to save.
When surveyed, those looking to buy in the next 10 years estimated that they would need to save an average of £35,402. The actual deposit needed today is almost half as much again.
London & Country’s associate director David Hollingworth says: “With this research predicting that the size of deposits required could rise considerably across the country, FTBs could be forgiven for giving up hope of owning their own home.
“There is some stark variation between cities but the fact that London deposits could be hitting almost a quarter of a million pounds by 2027 is alarming.”
He adds: “Although there are mortgage deals now available to as much as 95 per cent of the property price, rates on these types of deals with be higher than for those who have saved a larger deposit. It makes sense for FTBs to try and raise as big a deposit as possible, but that is very much easier said than done in today’s climate.”
L&C said that given these figures the ‘Bank of Mum & Dad’ would no doubt continue to play an important role for those looking to get on the property ladder. Hollingworth adds: “Scheme like Help to Buy and Lifetime ISAS can also be helpful saving options for boosting the value of a deposit.”