Reports this week show that a typical single first-time buyer in London may have to save for 17 years in order to gather together a 15% deposit and afford a home of their own. This represents an increase from the 15 years recorded in both 2008 and 2013, and is despite a notable fall in London house prices.
Even outside of London, the average single first-time buyer would need to save for 10 years to afford their own home elsewhere in the UK.
This goes to illustrate the scale of the challenge facing renters who want to take their first step on the housing ladder. Whilst it is true that many young people choose to rent as they enjoy the freedom and the opportunity it offers them, many others are desperate to own their own home but are stuck. With house prices growing approximately twice as fast as wages according to the Office for National Statistics (ONS), this situation is likely to continue for some time.
The research used ONS earnings figures and concentrated on people in their 20s – the age people typically begin saving for a home and the young professional demographic so coveted by landlords. These people are set to be living in the rental sector in the long term, a prospect which should fill landlords with confidence about the future of buy-to-let. Avenues onto the housing ladder are increasingly being closed off, including by government schemes which boost demand without increasing supply, meaning that the need for rental accommodation will remain acute.
Specifically, the need for high quality rental housing is going to become greater outside of London. A report from the Resolution Foundation says the blow to living standards caused by the high house prices is causing more and more people to flee London. This trend is particularly pronounced amongst those in their early 30s, with the number of people in that age group who are leaving the capital doubling since 2009.
The report found that, despite higher initial wages, once housing was taken into account young people in London are in some cases actually earning less in real terms than those on the average wage outside the capital – is it any surprise that so many want to escape?
And therefore, the regions continue to deserve their reputation as arguably the favourable option for buy-to-let landlords looking to grow their portfolio. The market is extremely strong, and this is a perfect time to invest. Click here to view our available buy-to-let investment opportunities.
