"Today’s first-time buyers are facing a significant struggle as house prices have boomed to record highs in recent years, while earnings have struggled to keep pace"
- Alistair Singer - My Home Move Conveyancing
Even after adjusting for inflation, the cost of getting on the ladder today is 191% higher for the average first-time buyer versus what their parents would have paid in the ’90s, with the average earnings-to-house price ratio more than doubling from 4.0 in the 1990s to 8.1 today.
The average first-time buyer today is aged 33 by the time they get that first foot on the ladder. The research by My Home Move Conveyancing also shows that the average age of a parent for a first-time buyer today is 62. Interestingly, this means that they would have turned 33 themselves in 1995 when the average age of a first-time buyer was also 33.
House price to earnings ratio has more than doubled since the 1990s
In the 1990s, the estimated average UK house price was £60,551. Allowing for inflation, this is equivalent to £119,189 today. Meanwhile, the average annual salary in the 90s was £15,034, or £29,593 once adjusted for inflation.
This means that the price of a home in the 90s was four times the average salary - giving an affordability ratio of 4.0.
Over the decades, changes in house prices and salaries mean that properties have become less affordable. In the 2000s the affordability ratio stood at 6.4, and in the 2010s it was up to 7.1.
In the 2020s, an average house price of £280,660 and an average annual salary of £34,637 means that the price of a home is 8.1 times the average earnings - more than double compared to the 1990s.
First-time buyers today pay 191% more than their parents
Further analysis shows that in 1995, when the parents of today’s average first-time buyer came to buy their first home, it will have cost them £38,806 - with a 15% deposit setting them back £5,821.
Even when adjusted for inflation, this is equivalent to purchasing a house in today’s market for just £76,833 having placed a deposit of £11,525.
Today, the average price paid by a first-time buyer actually sits at £223,554, requiring a deposit of £33,533.
Therefore, first-time buyers today are having to pay 191% more than their parents did in 1995 even after adjusting for inflation.
Director of My Home Move Conveyancing, Alistair Singer, commented: “We often hear about how much more affordable the world was when our parents were younger and the cost of getting on the ladder is certainly one area where they were far better off than their children are today.
"Today’s first-time buyers are facing a significant struggle as house prices have boomed to record highs in recent years, while earnings have struggled to keep pace.
"Add to this the initial barrier of a higher mortgage deposit, the new norm of significantly higher mortgage rates and often tighter criteria from lenders and it’s a very tough time indeed when it comes to buying your first home.
"For many, it’s a task that’s only achievable with the help of the bank of Mum and Dad or loved ones and there’s certainly no shame in that given today’s first-time buyers are paying 191% more than their parents did.”
