Property Price Versus Income: How Long Do You Have to Save For A House Deposit in the UK?
To highlight the affordability issues surrounding property in the UK, we analysed the latest annual salary data and calculated how long it would take for people in various professions to save for a house deposit in the traditional way, based on if they could put away 10% of their pay each month.
The average cost of a property in the UK right now is £234,742, while an average deposit is £32,841. Taking property price versus income into account across several professions, we found that saving enough for a traditional deposit could take 10 years or more for the majority. In some cases, it could take up to 20. This includes many low and middle-income earners across a wide range of essential and skilled professions, including receptionists, hairdressers, bus drivers, dental nurses, care workers, nurses, prison officers and more.
While deposit affordability is already a challenge for most first time buyers, the research also highlights the extremes of looking to buy a property outright, with some professions facing over 120 years of saving to step onto the property ladder.
Owning a Home by the Year 2040
To save enough for a deposit, a bartender with an annual salary of £16,195 faces 20 years of saving for a deposit by putting away 10% of their annual salary each month, with hairdressers and waiters facing the same length of time. Nurses, journalists and electricians all face 10 years of saving while putting away 10% of annual earnings. The research highlights the disparity between income and the modern cost of living and illustrates the struggle that many first time buyers face.
The research also highlights which sectors can be more advantageous than others for first time buyers, with some public sector positions being able to save deposits sooner than other skilled workers in the private sector. For example, prison service officers, firemen and policemen have the potential to save a deposit faster than bookkeepers, dental technicians and chefs.
Saving for a House When Affordability Is an Issue
Aside from receiving help from the Bank of Mum and Dad or buying a home as a couple, the most straightforward way to save a deposit is to put away a larger percentage of earnings each month, but for many, this simply isn’t an option.
Nick Lieb, Head of Operations for Share to Buy, says, “Saving for a deposit is not always straightforward, and this data presents an extreme version of stepping onto the property ladder. It shines a stark light on the affordability issues that a large portion of the population currently face. It highlights how the thought of struggling to save for years can really dissuade first time buyers from ever attempting to own their own home. Fortunately, there are other options and alternative routes that budding buyers may be able to take. Not only are there more affordable areas for potential purchasers to consider, but schemes like Shared Ownership can make saving for a deposit significantly more accessible for many.”
Shared Ownership enables first time buyers to pay a mortgage on a share in a new build or resale property, with a subsidised rent on the remaining share being paid to a housing association. Because of this, the amount needed for a deposit can be significantly lower than what would be needed for a traditional deposit. To qualify, for those outside of London, annual household income must be less than £80,000. For those living in London, it needs to be less than £90,000, which means this option can benefit middle-income earners across a large part of the UK demographic.
As an example, on the open market, a deposit is usually 10% of the full market value of the property, which means for a £500,000 home, the deposit would be £50,000. Through Shared Ownership, first time buyers usually pay a 5-10% deposit on the share they purchase, not on the full market value. Buying 25% of a £500,000 home, at £125,000, puts a 5% deposit at just £6,250, which is significantly more affordable than a traditional deposit.
Please Note: All data correct at time of collection. Property costs based on traditional deposits and not Shared Ownership schemes.