It’s a scary thought – 40 years before you own your first home. But that’s what a recent survey by Post Office Mortgages suggests might happen by the end of this decade.
The September 2012 survey found that the average age of a first-time buyer has risen from 28 in the 1990s to 35 today. If this rapid rise continues it could easily push the age up to 40 by the year 2020.
That seems to be an awfully long time to wait to be able to afford your first house.
Why has the average age got older and older? James Bawa, chief executive of Teachers Building Society, suggests that the increase of house prices versus salaries has a lot to answer for.
In 2001 the average cost of a house was just under £122,000 with the average salary £16,500. Today the average house price is £236,500 an increase of 94 per cent on 2001, and the average salary is £21,300, an increase of increase of just 29 per cent.
In other words, 12 years ago the average house cost just over seven times the average salary. Nowadays, the average house costs over eleven times average earnings.
Not only that, but the cost of living has gone up, making it harder to save for the bigger deposits that lenders are asking for.
Bawa suggests that lenders should assess mortgage applications based on affordability – people’s ability to make the monthly payments – rather than the amount of savings that they have in the first place. Applications need to be considered individually, not refused point blank by blanket computerisation.
That would certainly help. To find out how you can get on the property ladder quicker than the gloomy predictions, contact Limetree today.