The average first-time buyer could be paying a shocking £1m for their home in as little as 14 years.
Stroud & Swindon says it has found that if the present growth trends of house prices and incomes continue, first-timers will find their dream first home reaching the £1m mark in 14 years’ time.
The £1m starter home could require a deposit of seven times the average salary, which is likely to work out as £146,188 by 2024.
This would result in many consumers either not purchasing a home or putting off other life goals such as marriage or children so they can get on the property ladder.
This problem is most likely to affect first-time buyers in areas of the country which boast strong house prices. For example London and the South-East could see £1m starter homes as soon as 2020.
First-time buyers trying to buy in areas where wages are slow to rise will find it even harder to get onto the ladder, and by 2025, Northern Irish first-time buyers could need to borrow up to 10 x their income to buy a property.
Paul Chafer, sales director at Stroud & Swindon, says: “Mortgage providers need to consider their lending criteria and work to develop products that help first-time buyers to get onto the property ladder in a responsible and sustainable manner.”
Ray Boulger, senior technical manager at John Charcol, says: “These predictions are based on assumptions rather than facts, and no doubt a lot will change in the future.
“It is difficult to put figures like £1m into today’s context without knowing exactly what wage levels will be in future.
He adds: “Anyone who predicts 14 years into the future is brave as they will probably be wrong.”