The property ladder is something that has always been difficult to get onto, but it has become increasingly more difficult due to a multitude of different reasons such as the current cost of living crisis, and the looming question of whether or not we will enter a recession.
Although the house price inflation has dropped from 8.3% to 6.5% at the end of 2021. Halifax and Nationwide had similar statistics in the same year. The average house price is now around £281,713 in January 2023 a decrease from December 2022 which had house prices at £281,684, according to Forbes advisor UK.
Rising East reporter Molly Monaghan spoke to Charlene Reiss, a 22-year-old, about her experience trying to move out with her Fiancée and buying their first house together.
How long have you been thinking about moving out?
We’ve been looking at buying somewhere for about three years.
Have you started saving your deposit?
Yes, we started saving a few years ago, we just put a little away each month.
How have you found the process?
It’s not been too bad, luckily, we can both still live at home, which helps. If we rented, I don’t think we would have saved as much as we have. It’s hard as you have to save a lot and there’s no schemes anymore for first-time buyers to help you.
When are you hoping to have moved out?
We are hoping that in the next two to three years we will have enough money to deposit for a mortgage, but as I am a full-time university student I cannot get full-time work therefore it’ll be harder to be accepted for a mortgage.
The national minimum wage for people under 25 is between £10.18 and £10.42, which is the main group of people who will be looking at the opportunity of buying a house. As well as this it was reported that the amount of money earned to live ‘comfortably’ is £49,300. It is even more expensive to live in London, also you would need to earn £65,000 to help combat the current cost of living crisis.
First-time buyer schemes are put in place to help young people and those trying to get on the property ladder, however in March 2023, the schemes will come to an end. It was a ‘controversial’ scheme as it resulted in the artificial inflation of a lot of newer build which meant the only beneficiaries were the property developers.
Rising East also spoke to Donnell Bailey, 22, a property expert. Donnell has been working full-time as a property expert for six months.
What is a property expert?
A property expert doesn’t necessarily mean someone who invests in property or even owns their own home. It could be an estate agent or a property manager or in my case a property content writer.
In your opinion, what is the best way to save?
The best way to save would be to increase the amount of money you make. You can do this by cutting back on your monthly expenses that may not be mandatory like night outs or shopping sprees.
How long on average would you say it would take for a 20-something-year-old to save for a mortgage?
On average, given you started saving a decent amount of money from your early twenties or late teens when most people start working full time, you should be able to come up with a deposit with an average price in around seven – fifteen years.
Is it better to rent or to buy?
This is a complicated topic that ultimately comes down to the goal you have in mind. From a financial perspective, over time, it is better to buy a house most of the time. However, this isn’t to say that the process doesn’t come with a lot of sacrifices, which is where you would have to weigh up the pros and cons.
What are the pros and cons of each?
The biggest advantage to renting is that you can relatively quickly change the location of where you live, which is ideal if you’re looking for somewhere to live and haven’t decided on your ‘perfect’ home yet and want the room to still travel. As well as this you don’t have to save up a large deposit.
However, buying brings the advantage of being able to own the place you live in if you pay off the mortgage and enables you to have far more freedom in how you can renovate a home.
Is it the right time to buy considering the financial climate?
Currently, in 2023 there is a high-interest rate which means borrowing money is quite expensive. For instance, interest rates in 2021 and 2020 were low at 1%-2% so, as you paid off the mortgage you would have ended up with a smaller amount of money to pay off. On the other hand, if you took out a mortgage now, interest rates are upwards of 4% which would make the difference of hundreds of thousands of pounds. It is probably best not to buy a house unless you can truly afford it.
What would you do? Are you planning to move out anytime soon or are you going to stick to the comfort of your parent’s house?