Is it possible to buy a home in modern UK?

The latest ONS figures released this week show the relentless rise in house prices are not showing any sign of let up. UK residential property prices inflated by 7.7% in the year to November 2015, the fourth consecutive month of increases. The annual rate of change was strongest in the South and East of the country (around 10%), but prices in the North West still rose by 5%.

The picture doesn’t fare much better for first-time buyers (FTBs), who paid on average 7.4% more than they did in November 2014. To compound the news for those aspiring to get onto the property ladder, annual wages grew by just 2.4%. With this in mind there’s no doubt many budding FTBs will be wondering whether it is at all possible to buy their own home or if today’s modern UK is just not compatible with home-ownership.

The challenges for home-ownership                                                    

• Saving for a deposit
• Residential market competition
• Giving up life’s luxuries (for a while)

All of the above present challenges, especially for FTBs, which need to be overcome before you can call yourself a home-owner. Saving for a deposit is one of the biggest problems, particularly for those who are already renting, meaning little is left over to put in the savings account. According to Halifax the average first-time buyer deposit in 2015 was an eye-watering £32,000. The rise in house prices is in stark contrast to the growth of wages, which isn’t going to help many people. In fact it leaves a huge shortfall between what people can realistically save and what they need for a deposit.

To overcome this long-process of saving up a deposit, some are turning to the ‘bank of mum and dad’ whilst others are utilising Help to Buy schemes that require only a 5% deposit. Of course now many have started to use the Help to Buy ISA too, since it’s unveiling in December 2015.

As we blogged earlier this month competition to get on the ladder is fierce; there are now approximately 10 prospective buyers going for each residential property. However, the heat is rising in the second home and buy-to-let markets as purchasers hurry to complete their transaction before the stamp duty hike comes into force in April. Our residential property department has certainly noticed this rush whilst the tax is remains low. Many believe that once this new legislation comes in, FTBs will be given a small boost as competition for each property potentially diminishes.

What can I do to help get on the ladder?

It does seem that there is big a disparity at this moment in time between modern lifestyle in the UK and owning your first home. Those who do want to make the first step into the property world need to get serious about saving. It will be beneficial to use all the help you can get, whether this is through the Help to Buy ISA or another part of the Help to Buy scheme such as utilising special rates from property developers at new sites.

Remember to note that if you are thinking of buying with a partner and neither of you own a property, you can both open a HTB ISA and double your government bonus to help you save up that deposit quicker. Although prices in London and the South East are rising astronomically, the growth in other places, such as Yorkshire, the North West and North West, isn’t as great and may present better opportunities.