According to recent research from Barclays, the number of first-time buyers in the UK has doubled over the past year. However, more than half of those who bought their first home could not have done it without the help of family.
So, what else did Barclays’ research reveal? If family help is not available, what strategies can first-time buyers use to raise a deposit for their first home? Read on to find out.
First-time buyers and family support: what are the current stats?
The latest Barclays Mortgages’ First Time Buyer Index reveals the number of first-time buyers has nearly doubled in the last year, with 2021 sales volumes exceeding those in 2020 by 98%.
According to the data, buyers who purchased their first home in 2021 paid an average of £281,900. This is a decrease from the average price paid in 2020 (£294,500). However, the figure for 2021 is up from pre-pandemic levels in 2019, when first-time buyers spent an average of £249,700 on their first house.
Meanwhile, the average deposit paid by a sole first-time buyer in 2021 was £61,100. This figure is lower than 2020’s average (£71,400). For joint buyers, the average deposit paid was £61,000, down from £63,800 in 2020.
According to Barclays, raising a deposit was cited by respondents as the biggest obstacle to homeownership (35%).
It was, in fact, so difficult that over half of those surveyed (56%) admitted that they would not have been able to get on the property ladder without support from family.
What else did the research reveal?
Barclays’ research also revealed a deep knowledge gap among first-time buyers.
More than half (55%) of prospective or existing first-time buyers admitted that they had no idea how to go about purchasing their first home.
Many were also unaware of some of the additional costs of buying a property. Some 39% were not aware that they needed to pay solicitors’ fees. And 54% didn’t know that they might need to pay Stamp Duty, if not otherwise exempt.
According to Barclays, the complexity of buying a property, including the time, effort and finances that are needed, has led to “high levels of despondency” among first-time buyers. The research revealed that nearly two-thirds (64%) of people planning to buy their first home are concerned that they will never be able to realise their dream.
How can you save for a deposit without family help?
It’s no secret that today’s first-time buyers face many challenges when it comes to buying a home.
Sky-high prices and the rising cost of living have made it harder to raise money for a deposit. The fact that more than half of first-time buyers have to rely on their families for financial help is a clear indication of how dire things are.
Of course, it’s completely okay to ask for help from family members if they are in a position to provide it. But not everyone will be able to rely on family support. If that’s your current situation, do not despair. You still have options.
Here are a few tips that can help you save more money for a deposit.
1. Open a lifetime ISA and access a free 25% government top-up
With a lifetime ISA, you can save up to £4,000 each year and receive a free government top-up of 25% to use towards the purchase of a first-home.
This special savings account is available to people aged 18-39 at the time of opening. You can save into the account until you are 50.
2. Create a budget to track your expenses
If you don’t have a budget, create one and use it to track your everyday spending.
By tracking where your money is going, you may be able to identify some expenses that you could cut back on, such as regular takeaways or subscriptions you don’t need. You can then put the savings you have made towards your house deposit.
3. Reduce your bills
Examine your household and other bills, such as energy, broadband and car insurance, to see whether you can save money by switching providers.
4. Start a side hustle
If you have a few hours to spare each week, picking up some work on the side can provide you with extra cash to put towards your deposit and bring you closer to realising your dream of homeownership.
These days, the possibilities for work you can do on the side are almost endless. If you’re not sure where to begin, take a look at these five side hustle ideas that pay £1,000 a month.
The post Number of first-time buyers DOUBLES, but more than half still rely on family support appeared first on The Motley Fool UK.
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