Aspiring first-time buyers could need almost £24,000 more to purchase an average starter home by 2030, according to analysis from Coventry Building Society.
The mutual says the average first-time buyer property in England could rise from £245,515 today to £269,377 by the end of the decade.
Its projection is based on Office for Budget Responsibility forecasts showing house prices increasing by more than 2% annually until 2030.
If those forecasts prove accurate, a buyer seeking a 90% mortgage would need an additional £2,386 for their deposit – equivalent to saving around £56 extra each month.
REGIONAL DIVIDE
The amount buyers may need to save varies significantly across England.
County Durham remains the most affordable area in the analysis, although its average first-time buyer property is projected to increase from £132,748 to £145,650.
At the opposite end of the market, the average starter home in Surrey could rise from £382,334 to £419,494 by 2030.
The analysis excludes Greater London from its county rankings, but suggests the capital’s average first-time buyer property could climb from £496,302 to £544,539.
Other areas projected to remain among the least affordable include Hertfordshire, Oxfordshire, Berkshire and Buckinghamshire.
STAMP DUTY PRESSURE
Coventry warns that rising prices could also push more starter homes above the £300,000 threshold for first-time buyer Stamp Duty relief, increasing purchasers’ upfront costs.
The Government’s proposed Your First Home scheme is expected to offer 20% equity loans and deposits as low as 2.5% on eligible new-build homes in England. Further details are due at next month’s Budget.
Jonathan Stinton, Head of Intermediary Relationships at Coventry Building Society, says: “For first-time buyers, the deposit challenge is a moving target. People are not just saving for the price of a home today, they are trying to keep pace with where prices could be by the time they are ready to buy.
“Even modest annual increases can add up over several years, meaning buyers may find their goal has shifted significantly.
“These projections aren’t about putting people off buying a home but highlighting the importance of planning ahead and understanding how much you may need by the time you’re ready to take that step.”
