Many facing long wait for first home

A new report from the think-tank the Resolution Foundation has said low and middle income earners may have to wait up to 22 years to earn enough to buy their first home.

The report says that people in this group, who bring in approximately £20,000 a year in take-home pay and which account for 5.8m households, will see their pay decline before it flattens out around 2016-17 and it could take until about 2020 before it returns to pre-recession levels, even if the current downturn is followed by strong growth.

The report looked at the group’s prospects of getting on the property ladder and said that, while it typically took four years for them to save up for a deposit in 1991, this had doubled to eight years a decade later and, by last year, it had risen to 22 years, meaning that many below the age of 35 face years of rented accommodation.

The Resolution Foundation says that its calculations are based on first-time buyers raising a deposit of around 20% to buy a property costing just over £124,500. It says that the 22 year wait is largely due to the rise in house prices along with bigger deposits being needed, allied to the current decline in wages.