Millennials struggle to buy their first homes as UK housing deposits soar

The number of adults aged 21-34 living with their parents is set to grow, as property prices continue to rise in the UK, despite the pandemic.

Latest figures released by Halifax show that first time buyers across the UK are struggling to get on to the property ladder as mortgage deposits soar.

The average deposit required in Northern Ireland is around £30,000 and a staggering £132,000 in London.

The figure, for 2020, is a 17 per cent increase on the previous year with the average deposit placed by a UK first-time buyer in 2019 sitting at £46,200.

In effect, an average Greater London deposit would be enough to buy over 90 per cent of the average Northern first-time buyer home outright.

Stricter mortgage lending rules following the 2008 recession and increased demand for rental property are also affecting millennials from buying their first home.

Stephen McCarron, Vice President of The National Association of Estate Agents in Northern Ireland said, “Since 2008, since the credit crunch, banks and building societies have become much more nuanced at how they credit score any individual.”

As a result of this, the average age of a first-time buyer in the UK is 34 years old.

This is six years older than the average age of a first-time buyer in 2007, which was 28 years old.

Keith McKeever, a 33 year old sales executive from Eglinton, says he never imagined still living at home in his thirties, “If I could move out tomorrow I would but life happens and saving for a deposit takes time. I imagined moving out a lot younger than this but the world isn’t the same as it was 10 years ago.”

“There isn’t much left at the end of each month once everything is paid for, you go through so much. On top of this, you’re worried about keeping your finances in check so that when the time comes, they will accept your request for a mortgage. If you don’t inherit money or get help, it is just not achievable in two or three years for most people.”

According to statistics released by Aviva insurance, one in three adults living with parents don’t ever expect to own a home.

Analysis carried out by the insurer shows that the number of adults in this age group, living with parents, has risen by 37 per cent over a 10 year period, increasing from 903,000 to 1.23 million.

The data shows that this drastic increase coincides with the 45 per cent increase in house prices for first time buyers.

Nearly two-thirds of adult children living with parents in the UK say that they can’t afford to move out, while 48 per cent say they live with family to save money.

Gemma Wardle, a 24 year old post graduate student from Portsmouth, who lives at home to help her save, says rent prices and deposit amounts have taken their toll on her ability to move out, “I’d move out now if I had enough money for a deposit. I feel lucky that I get on well with my parents, I am paying rent living at home but not as much as I would be if I was privately renting on my own – that is my parents way of helping because they don’t have the money to give me.”

Rental prices have risen 13.9 per cent in the last five years, increasing more in Northern Ireland and England than in Scotland and Wales, with Northern Ireland seeing the largest increase in the last 18 months.

Kyle McKenna, a 24 year old history teacher renting a home in Manchester said, “Rental prices have significantly increased over the years making it difficult for the younger generation to save for a mortgage. Our current society is built on greed and finance, therefore, we are more or less in a tied end unless we can get help from family or parents towards a mortgage.”

Many young people are relying on their parents or inheritance to boost or provide them with the large deposits required to buy their first home.

Kate Grylls, a 31 year old solicitor who recently bought her first home in Hackney, London, earns a very high salary and still required financial help from her parents, “The government is trying to help with stamp duty reliefs for first time buyers and things like the help to buy scheme but these are all having a limited affect given high house prices. It took a long while for me to save for a deposit but my parents loaned me some deposit money which was a big help.”

Index values (January 2015=100%)

On average, Scottish first time buyers require a 20 per cent deposit on their first home. This leaves many seeking help from government schemes. Without this aid, or the help of ISAs, help to buy schemes or co-ownership schemes, many have to continue to pay inflated rent or stay at home with their parents.

Eireanne Ovens, a 26 year old primary school teacher from Glasgow, has just bought her first home after eight years of saving whilst living at home, “As a single buyer I felt more financially pressured. If it wasn’t for the ISA and the First Home Fund set up by the Scottish Government, I wouldn’t have been able to buy my property at this time. I saved for years whilst paying digs to my parents and have just purchased my one bedroom flat.”

Here, in Northern Ireland, the average house price is £136,850, the second lowest in the UK, with the overall lowest average deposit amount required in the UK at £30,050.

However, some young people still face the challenge of being approved for a mortgage even with the required deposit amount saved.

Megan Regan, a 27 year old beauty salon owner from Greysteel , also lives at home and says it is extremely difficult to be approved for a mortgage if you are self employed, “I have been saving for years, I would have a healthy deposit sitting there now but being self employed and no PAYE, I just won’t get approved. I need my business to have three profitable years before they consider me, so I’ll be staying at home for another couple of years yet. I also want to have enough money behind me so that when I do buy, I can do the house up and I’m not just clearing my savings.”

“At this stage, getting a mortgage seems near enough impossible.”

Author profile