How first-time buyers are saving for a home

New report shows first-time buyers are looking for more work to fund their first property

Around 45 per cent of first-time buyers who bought in the last 12 months believe property is a good investment, rising to 50 per cent of potential first time buyers.

The figures come from interviews with more than 2,000 potential or existing first time buyers by Yorkshire Building Society which reveals that 85 per cent of those who bought in the last year said setting up home with their partner was their primary goal. Three out of four people who had yet to purchase their first property aspired to own their own home.

Potential first time buyers said the biggest challenges they face are funding a deposit (56 per cent), inflated house prices (38 per cent) and worries around credit history (16 per cent). A deposit of around £26,000 is needed to buy the typical first home which means, on the basis that the typical first time buyer saves £248 per month, it will take more than eight years to achieve enough for a deposit.

To raise money for their first home, 41 per cent have taken the practical approach of setting up a regular savings account, while 8 per cent have cut back on luxuries such as nights out and 5 per cent are taking on overtime or additional part-time work. Around 3 per cent are also trimming day to day spending. The number of first time buyers who have needed help from family and friends has risen sharply from 4 per cent to 10 per cent.

The research also showed that potential first time buyers have clear ideas about their ideal first home with 54 per cent wanting a garden, 36 per cent choosing a home near good transport, 28 per cent picking a property that is low maintenance and 26 per cent wanting something near their family.

Around 23 per cent of potential first time buyers would buy a smaller house in a better area which contrasts with just 13 per cent of those who bought their first home more than five years ago.

“In the last five years mortgage activity in general has more than halved, and today’s first time buyers are facing a squeeze on incomes and pay rates that are not keeping pace with inflation," said Chris Smith, Group Direct Mortgage Manager at Yorkshire Building Society. "However, it’s encouraging to see the proportion of first time buyers has actually begun to increase in this period and more people are seeing home purchase as a prudent financial decision."