In the 1970s, the average age of first time buyers (FTBs) was just 25. The average age of a FTB is now 33.1 in England as a whole, with London as expected, higher at 35. It is no wonder when you look at the numbers:
- Average Property price in England = £249,000 (up 315% since 1997 when earnings are up 87%) = 7.8 times average full time salary when it was “just” 3.54 x average salary in 1997.
- In London, the average house price is 11.78 X the average Londoner’s salary with the South East having an average property price of 9.92 X the average salary.
However, Kirsty Allsopp believes the following:
“I’m up in Nottingham right now and there’s a nice three-bedroom home with a long garden on for £320,000. I get enraged when people say they can’t afford to buy. They can. But they have to move, which is hard if you don’t have roots there. I know there are many can’t afford to buy, but others are not willing to make the sacrifices. I bought my first property when I was 21. Yes, I had help. But when I bought, the lifestyle of easyJet flights, coffee, gym memberships and Netflix didn’t exist. I used to walk to work and take my own sandwich. Ask yourself, could you get a job, live at home with your parents for three years and save every penny for a deposit? I’ve seen people do it. They make enormous sacrifices.”
She admits she had parental help to get on the ladder herself which is totally fair enough and many FTBs often lean on the Bank of Mum and Dad. She fails to mention her father is a Baron and that not all people can rely on the privilege of having familial help but to suggest that stopping takeaway coffees, Netflix and the gym could mean you can afford a home is madness. Not only could it strip the enjoyment from life, her idea to just relocate when it is likely to be tough to up sticks and find a job just like that on top of moving away from friends and family isn’t the brainwave she believes it to be.
Home ownership is not the be all and end all, but in the UK it is certainly something that most see as the right thing for them. So how much could you actually borrow and how can you help yourself onto the property ladder?
Lenders reacted severely when the pandemic hit, slashing affordability and cutting all high loan to value products. 2 years on, however, and we are almost back to normal as many return to lending in the high loan to value space.
The general consensus of how much you can borrow is limited at 4.5 x your salary. As a FTB, however, there are opportunities to borrow up to 5.5 x if you earn over £31,000 if buying on your own or more than £50,000 jointly. The “catch” is that you will need to be on a 5 year fixed product which means you are effectively locked in for the first 5 years of your mortgage deal but this also gives you 5 years of the security of knowing how much monthly payments will be regardless of interest rate fluctuations.
As an example; a Sole Borrower earning £35,000 could now borrow £192,500, with Joint Borrowers earning £35,000 each could get a mortgage of £385,000 (£70,000 greater than a regular multiple of 4.5).
These products, as of 10th February 2022 are being offered on a 95% loan to value which means home ownership could be closer than you think.