First-time buyers save for an average of four years

First-time buyers are saving for an average of four years in order to raise the deposit to get on the property ladder, new research from UK-based money app Ziglu shows.

The number of first-time buyers rose to nearly 410,000 last year with average deposits estimated at around £53,935 but affordability is still being squeezed with house prices estimated to be around 6.9 times earnings for would-be homeowners.

Ziglu’s study among people who have bought in the past five years shows on average they saved for four years with 22% saying they saved for more than five years.

A lucky one in 10 said they did not have to save for a deposit.

Those who had to save found it tough – half (50%) of them said it was so hard they considered giving up with 25% saying they came close to stopping saving several times.

Around three out of four (72%) relied on cash saving accounts to build up their deposit but around one in eight (13%) invested in cryptocurrencies to help speed up the saving process. That was slightly more than the 10% who invested directly in the stock market.

The research for Ziglu, which offers current account services, FX, investments and also enables customers to buy and sell a range of cryptocurrencies, found 70% of first-time buyers used two or more methods of saving to raise the money for their deposit.

Mark Hipperson, founder and CEO of Ziglu, said: “First-time buyers have never had it so tough as rising house prices make it harder and harder to raise the money for a deposit.

“At the same time low interest rates make it harder to earn any return on cash savings which despite Government support such as Lifetime ISAs add to the pressure and leave people waiting for four years to raise the money they need.

“Cryptocurrency is increasingly playing a role in helping people save for deposits although clearly given the volatility in the market it cannot be the only way people save and would-be first-time buyers should look to other methods.

“Ziglu’s Boost accounts, for example, with their 5% interest rate offer an alternative savings fund for anyone raising the money they need for a deposit.”

The research shows first-time buyers are making sacrifices to boost their saving with cutting back on going out the most popular – 56% of those who have bought in the past five years saved cash that way while 41% cut back on holidays and 36% didn’t go on any holidays.

The table below shows what first-time buyers cut back on and gave up to get themselves on the property ladder.

Cut back on going out56%
Cut back on holidays 41%
Spent less on clothes 40%
Didn’t go on any holidays36%
Took on extra part-time jobs29%
Cut back on food spending 29%
Sold possessions 19%

The research found 28% of first-time buyers received some money from their parents while 11% got money from grandparents and 20% were given money by other family members.

Would love your thoughts, please comment.x