We had yuppies flaunting their wealth decades ago, but is the property market now so bad that we are producing guppies, those under 40 who have given up on property altogether?
Halifax data shows the average deposit for those who bought their first home last year was just over £62,450, up 8 per cent on the average in 2021.
In London, it was £125,378, about a quarter of the capital’s average property price.
A survey by comparison service Uswitch claims the typical home in 25 per cent of England’s postcodes will be unaffordable for local buyers by 2025.
Out of reach: Zoopla says more than a third of those earning £60,000 or more a year have abandoned plans to buy in the next ten years
Zoopla says more than a third of those earning £60,000 or more a year have abandoned plans to buy in the next ten years.
The Hamptons real estate agency states that young Londoners would have to travel 40 kilometers outside the capital to be able to afford a home taking into account their average salary.
No wonder Prime Minister Rishi Sunak is under pressure to reintroduce the Help to Buy Share Loan scheme, launched in 2013 and used by more than 350,000 people to buy their first home.
Some said it inflated house prices before it ended in March, but many are awaiting an announcement at October’s Conservative Party conference that it will return.
So in the meantime, is there a way to get ahead in this era of high house prices and high interest rates?
One obvious route is to apply to the Bank of Mom and Dad. Estate agency Savills says 171,000 first-time buyers received family help with a deposit in 2022, a drop on the 2021 total because fewer purchases were made across the housing spectrum in response to rising interest rates.
If family assistance is not available or is not sufficient on its own, there are several government programs open to first-time buyers.
1. Mortgage guarantee
The Help to Buy Home Equity Scheme ends in December and aims to increase the number of mortgages available with just a 5 per cent deposit.
Since launching in 2021, there has been a huge increase in 95 per cent mortgages, not just from scheme lenders, and any type of home priced under £600,000 is eligible. More details at www.gov.uk.
2. Plan for first homes
It sells new construction homes to first-time buyers at 30 to 50 percent below market value. It operates only in England and is open to those earning less than £80,000 (or £90,000 in London).
Some council rules vary, with priority given to key workers and those on low incomes.
First Home properties cannot cost more than £250,000 (£420,000 in London) once the discount has been applied.
But not all developers are participating, and critics say the plan inflates sales prices.
3. Shared ownership
This gives the opportunity to purchase 25 to 75 percent of a property with a mortgage and pay rent on the remainder.
Over time, you can increase your share up to 100 percent.
Again, this mainly applies to new build properties and different schemes operate in different parts of the UK. Most properties are on blocks or estates, so they also have service charges.
4. Rent to buy
Homes are made available through housing associations at a discounted rent of 80 per cent of local market value, with the expectation that tenants can save the remainder for a deposit and buy a share of the property with a mortgage later.
In most cases, when you buy, you get back 25 percent of the rent you paid plus half of any increase in the property’s value since you moved in.
All of this goes into your deposit. To be eligible, your household must earn less than £60,000 a year.
5. Right to buy
This scheme, introduced 35 years ago under Margaret Thatcher, still exists in England and if you are a council tenant you may be able to buy your house or flat at a discount.
The maximum discount, in London, is £116,200 but for most applicants the figure will be much less.
6. Isa of a lifetime
This account, dubbed Lisa, encourages first-time buyers to save for their home.
You can open one if you are between 18 and 39 years old and contribute until you are 50.
Each year you can save up to £4,000, and the Government will add a 25 per cent bonus to what you contribute, worth up to £1,000 a year.
