Getting on the property ladder is something of a mild obsession for most people living in the UK, and with good reason.
First Time Buyers and the Bank of Mum and Dad
First Time Buyers and the Bank of Mum and Dad Getting on the property ladder is something of a mild obsession for most people living in the UK, and with good reason. The average value of a home in the UK in 1971 was just £5,632, with the same figure today rising more than 4,000% to over £250,000, a good investment in anyone’s books. Had house prices increased in line with inflation over that time the actual figure would be just £67,483. This long-term success in the housing market had massive financial rewards for Generation ‘X’, but all their success if now being felt by today’s first-time buyers who face a hugely different landscape. Saving for up for the average mortgage in the 1960’s, an average of £595, took a little over 2 years to do with an average household income of £2,854. For those buying today it takes more than 5 years to save up for their deposit, an average of £20,622. Unsurprisingly this has triggered a number of significant trends for first time buyers. Most alarmingly, the average age of first time buyers has jumped by 7 years from 23 in 1960, to almost 30 today. The number of 20-24 year olds who own their own home today is just 13%, a colossal drop compared to 40% back in 1990. Another interesting factor that has played an undeniable part in this is the average age in which people are getting married. This figure has steadily got higher and higher and in the UK the average age in now 31.6 years old. Why is this important, well when you consider that three quarters (74%) of all first time buyers were couple households the importance of finding a soulmate (or at least someone you are confident enough to buy a place with) becomes all the more important. So, it is irrefutable that getting on the housing ladder is more difficult now than ever before, but what support is out there? The government has installed a number schemes that supposedly make the act of buying your first property more achievable, Equity Loan Scheme and Help To Buy, but unquestionably the leading source of aid for first time buyers is the Bank of Mum and Dad. A report from Legal & General suggested that parents will lend more than £6.5bn in 2017 to support their children buy a home, a 30% increase on the previous year. All in all, the total funds provided will back the purchase of a mammoth £75bn worth of property, a figure so significant it makes it the Bank of Mum and Dad the equivalent of a top 10 mortgage lender. The average deposit in the UK is £20,622, so it is unsurprising that the average amount loaned or given to adult children to buy their first home is now around £18,505. Support of this form, according to The Social Mobility Commission reports, is now said to play a part in some of first-time buyers purchases, an all time high.