Deposits needed by first time buyers are set to rocket by 55 per cent in Edinburgh over the next ten years, a report has revealed.
Would-be home purchasers will need to save up a deposit of £58,204 to buy a home in Scotland’s capital by 2027, the study claimed.
Meanwhile, in Glasgow, deposits for first time home owners will rise by 48 per cent to £32,291. UK-wide, the average first-time buyer deposit could be set to rise by nearly 60 per cent over the next 10 years, pushed higher by soaring house prices in London.
David Hollingworth, spokesman for mortgage adviser L&C, which compiled the report with Opinium Research, said: “With this research predicting that the size of deposits required could rise considerably across the country, first-time buyers could be forgiven for giving up hope on owning a home.
“It makes sense for first-time buyers to try and raise as big a deposit as possible but that is very much easier said than done in today’s climate.”
On average, first-time buyers have currently saved up £16,436 toward their deposit, and predict it will take three years and eight months in total to raise the full amount. The current savings level doesn’t even amount to a third of today’s average deposit and almost a quarter of first-time buyers have not saved a penny towards a deposit.
The study also looked at the attitudes of first-time buyers in the UK, asking how they are planning to raise their deposit. On average, first-time buyers expect 44 per cent of their deposit to come from their own cash savings, with a further 15 per cent coming from a Help to Buy ISA and 6 per cent coming from a Lifetime ISA. A further 11 per cent is expected to come from a sum from parents or other family members, and 6 per cent will come from an inheritance.
The research used data from the ONS House Price Index to extrapolate what the average dwelling price and mortgage advances were given to first time buyers in the UK’s 17 key cities over the past 20 years. From the gap between the average price recorded and the average mortgage advance received, researchers calculated what deposits were put up front by first time buyers.
Meanwhile, Opinium forecasted what prices might do over the next ten years and extrapolated what first time buyers would need to pay in deposits in five and 10 years’ time.
However, the ESPC pointed out that first time buyers usually acquire property at the lower end of the market – meaning their deposits would not be calculated on average house prices.
David Lauder, spokesman for ESPC Mortgages said: “Many lenders are offering 95 per cent mortgages, and most first time buyers would be looking for a property in the range of £100,000 to £150,000 in Edinburgh. This would mean that they would require up to £7,500 for a 5 per cent deposit and £15,000 for a 10 per cent deposit.