The deposit gap: First-time buyers need additional £12,000 for 15% deposit

• As the housing market reopens in England new analysis by Rightmove shows the average first-time buyer 10% deposit is currently £24,189, jumping to £36,284 if a 15% deposit is needed
• The current average asking price of a typical first-time buyer property in England is £241,891, which is 2% higher than this time last year. There is a total of £60 billion worth of property in this sector currently listed on Rightmove
• Analysis of first-time buyer deposits needed in 20 cities across England shows the wide disparity of the asking price of property:
  • The biggest deposit is needed in London where an average 10% deposit is £47,757 and an average 15% deposit is £71,635
  • The smallest deposit is needed in Bradford where an average 10% deposit is £8,995 and an average 15% deposit is £13,492
• Some lenders may bring back lower deposit mortgages now the market is open again in England, but until availability becomes widespread again it’s likely many first-time buyers will need to consider a 15% deposit to buy a home in the current market

Since the housing market reopened in England last week, demand for property has been steadily increasing.

The number of full property details viewed on Rightmove, a sign of serious buyers looking at pictures, descriptions, videos and floorplans, has recovered from a 35% drop as the housing market closed to now being up 2% on this time last year¹.

A survey by Rightmove during lockdown found that 94% of first-time buyers were determined to continue with their plans to get their first step on the housing ladder when they were allowed to do so².

This new analysis, based on properties that typically appeal to first-time buyers (those with two bedrooms or fewer), shows the additional amounts first-time buyers may need to save up for or hope to borrow from family, if they need a 15% deposit to comfortably afford the mortgage repayments.

The study of 20 cities in England reveals an average difference of over £12,000 between a 10% and 15% first-time buyer deposit based on the current average asking price of £241,891.

There is a difference of over £58,000 between the biggest and smallest 15% deposits needed in cities in England, with the biggest needed in London and the smallest needed in Bradford.

Despite the seven week pause in the market, asking prices of all typical first-timer buyer property currently listed have generally held up, and are 2% higher in England than this time last year in this sector.

There is currently £60 billion worth of property in this first-time buyer sector on Rightmove, including those that currently have a sale agreed and now hope to continue through the conveyancing process to completion.

In five out of the 20 cities asking prices are slightly cheaper than in 2019, though four of these – Bournemouth, Stoke-On-Trent, Sheffield and Birmingham – have dropped by less than 1%, and Reading is down 1.1%.

Rightmove’s Commercial Director and Housing Market Analyst Miles Shipside comments: “Many first-time buyers looking to grab a bargain right now may find they’re disappointed, as on the whole asking prices of all first-time buyer properties up for sale have been holding up. There will of course be some sellers who need to sell quickly and may be willing to negotiate on price so it’s worth asking your local agent if there’s any with this predicament if you do now need to lower your budget. However, where demand is outstripping supply and it’s an attractive property in a desirable location then an offer closer to the asking price will have a better chance of being accepted.

“If a property is over-priced it’s usually pretty obvious by looking at similar properties up for sale on Rightmove in the same area, or by using sold prices to find out how much properties nearby sold for recently, so this should help prospective buyers feel more confident that they know how much they should be offering.

“If lenders are able to offer more attractive lower deposit mortgages it would help sustain the recovery in activity. If it can be done responsibly, with strict affordability criteria, then a return to more mortgage offers of 90% loan-to-value, or even 95%, could make a huge difference to someone having enough money now for a deposit or having to save up for another few years. First-time-buyers will be keeping a close eye on how lenders deals unfold.”

As agents adapt to an understandably stringent safety process for viewing houses, Rightmove has created some guidelines on how to view property safely based on the government’s published guidance for home-movers, available here.

City	Average asking price April 2020	Average asking price April 2019	Annual % price change	Average 10% deposit	Average 15% deposit
London	£477,569	£467,999	2.0%	£47,757	£71,635
Manchester	£167,778	£162,478	3.3%	£16,778	£25,167
Birmingham	£158,728	£159,764	-0.6%	£15,873	£23,809
Bristol	£240,686	£232,686	3.4%	£24,069	£36,103
Liverpool	£112,249	£111,691	0.5%	£11,225	£16,837
Nottingham	£143,936	£132,314	8.8%	£14,394	£21,590
Bournemouth	£213,161	£213,496	-0.2%	£21,316	£31,974
Newcastle Upon Tyne	£127,231	£124,491	2.2%	£12,723	£19,085
Leeds	£138,987	£137,948	0.8%	£13,899	£20,848
Southampton	£174,519	£174,487	0.0%	£17,452	£26,178
Sheffield	£129,721	£130,176	-0.4%	£12,972	£19,458
Plymouth	£143,058	£139,694	2.4%	£14,306	£21,459
Leicester	£150,620	£147,226	2.3%	£15,062	£22,593
Brighton	£309,599	£306,249	1.1%	£30,960	£46,440
Portsmouth	£178,431	£175,249	1.8%	£17,843	£26,765
Stoke-On-Trent	£100,800	£101,002	-0.2%	£10,080	£15,120
Hull	£97,589	£95,708	2.0%	£9,759	£14,638
Bolton	£114,339	£107,217	6.6%	£11,434	£17,151
Reading	£247,129	£249,942	-1.1%	£24,713	£37,069
Bradford	£89,948	£85,413	5.3%	£8,995	£13,492

 

Region	Average asking price April 2020	Average asking price April 2019	Annual % price change	Average 10% deposit	Average 15% deposit
North West	£129,624	£125,747	3.1%	£12,962	£19,444
East Midlands	£149,265	£144,819	3.1%	£14,926	£22,390
Yorkshire and The Humber	£129,780	£126,363	2.7%	£12,978	£19,467
West Midlands	£150,990	£147,321	2.5%	£15,099	£22,648
South West	£202,542	£197,754	2.4%	£20,254	£30,381
London	£477,569	£467,999	2.0%	£47,757	£71,635
North East	£100,340	£98,680	1.7%	£10,034	£15,051
East of England	£229,392	£227,516	0.8%	£22,939	£34,409
South East	£250,352	£248,663	0.7%	£25,035	£37,553
England	£241,891	£237,160	2.0%	£24,189	£36,284

 

ENDS

Notes to editor

1 Survey on Tuesday 28th April. Number of first-time buyer responses = 301.

What impact has the lockdown had on your progress or plans to buy, sell or rent a home? (First-time buyer responses)

• I’m going ahead as planned – 34%
• I’ve postponed my plans for now but plan to go ahead after lockdown – 60%
• I’ve withdrawn from the process for now – 6%

2 Property detail views on Rightmove, at the low point on Monday 6^th April 2020 (-35%) and the year-on-year difference on Saturday 16^th May 2020 (+2%).