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London first time buyers need £115,000 deposit to buy their home

First time buyers must have a deposit of £115,000 to secure their first home as London house prices rise 48% in the last ten years.

Property prices in London have increased 48% in the last ten years to an average of £419,608 and first time buyers need a deposit of £114,952 to buy their home.

This exceeds the rest of the country where house prices are higher by 21% over ten years increasing from £172,659 in 2008 to £208,741.

First time buyers represent 51% of the all mortgage financed house purchases rising from only 38% in 2008 with the balance made up of home movers and buy-to-let investors.

For remortgage buyers the higher prices during the last 10 years give them an opportunity to release capital which they can use to improve their home.

Can buyers raise the deposit?

The average deposit for first time buyers has increased 71% from £19,364 in 2008 to £33,127 in 2018 whereas in London it has tripled from £38,335 to £114,952 over the same period.

The following table from Moneyfacts shows regional house prices and the average deposit paid by first time buyers in 2018.
Region House price
London £419,608 £114,952
South East £275,632 £52,921
East Anglia £210,639 £38,915
South West £207,329 £37,371
West Midlands £168,519 £25,901
East Midlands £163,218 £24,825
North West £148,055 £22,208
Yorks and the Humber £140,766 £21,115
Scotland £139,318 £20,605
North £126,685 £19,003
Northern Ireland £124,035 £18,605
Wales £140,201 £16,586
London has the highest deposit of £114,952 which is 27% of the property value with homebuyers in the South East paying £52,921 or a deposit of 19%.

With competition from buy-to-let investors and reduced supply of suitable properties, prospective home buyers must continue renting and saving for a bigger deposit.

First time buyers are more reliant on family assistance and figures from the Office of National Statistics (ONS) show 34% of new buyers receive financial help from parents or grandparents as a gift or loan.

For older homeowners the considerable value in their homes allows the equity release buyer to access wealth using a lifetime mortgage which they can give to a child or grandchild for a deposit on their first home.

Russell Galley Managing Director at Halifax said, first time buyers are having to dig deeper than ever to get on the property ladder.

Homebuyer numbers rising quickly

Despite the increase in average deposits at £30,000 and the concern many young people feel about home ownership, the number of first time buyers continues to grow and is nearly back to the peak seen of 2006, says Mr Galley.

First time buyer numbers for the second half of 2018 reached a high of 175,500 which has more than doubled since a record low of 72,700 in the first half of 2009.

Numbers have boomed since the Help to Buy Scheme was introduced in 2013 which has helped 128,317 people buy their first home.

The government Help to Buy scheme offers an interest free loan equal to 20% of the property value or 40% if you live in London and available on new build properties up to £600,000.

Apart from area and price, top priorities for those aspiring to buy are home range from settling close to where they work (53%), buying a home they could see their future family living in (49%) and good transport links (42%).

They may not have to wait long as the average of first time buyers in 2018 is 31 years, two years older than a decade ago and in London this is age 33.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.

Learn more by using the property value tracker chart, mortgage monthly costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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