It takes first-time buyers six months longer to save for a house deposit now compared to the first quarter of 2004 and one year nine months longer than in 1994, when house prices began their phenomenal rise.

According to research from National Savings and Investments (NS&I), since the first quarter of 2004, the time it takes to save for a 5% deposit on a typical first home in the UK has increased from four years to four years six months.

With the average first home now 12% more expensive compared to the first quarter of 2004 and the typical first-time buyer’s income increasing by only 6% in the same period, it is harder than ever for those who want to get a foothold on the property ladder.

In 1994 Q1, it took just two years nine months to save a 5% deposit and first-time buyers’ incomes averaged £18,444, while a typical starter home was only £49,021, so the deposit needed was £2,451 – just over a third what is required today. The average price of a first-time buyer home in 2004 Q3 is £137,000 and the 5% deposit required is £6,866. The combined average income for first-time buyers is currently just over is £33,000.

Future optimism

However, the first signs of a cooling house market offer a glimmer of hope for would-be first-time buyers. Between 2004 Q2 and 2004 Q3, the time taken to save for a deposit remained static in five regions: London, Yorkshire & Humberside, East Midlands, East Anglia and Northern Ireland.

This can be explained by increases in interest rates on savings accounts, slowing house price rises and incomes continuing to rise across the UK. If these trends continue, the time required to save for a deposit could reduce in the coming months.

Across the UK

There are strong regional variations across the UK in the time it takes first-time buyers to save for a deposit. It takes longest to save in London, the South East and the South West, where the average first-time buyer has to save for four years and six months to build up the 5% deposit.

These regions account for the vast majority of households and housing stock, which is why the time taken to save equals the average for the UK as a whole.

Buyers in Northern Ireland save for the shortest amount of time, with the average first-time buyer taking three years and three months to raise their deposit. Northern Ireland enjoys a relatively low house price to income ratio, but has also seen house price rises much lower than the national average.

Wales has seen the highest percentage rise in the time it takes to save for deposit – it now takes 33% longer than in the first quarter of 2004 for a first-time buyer to save the required deposit. London, the South East, the South West and East Anglia recorded the lowest rises, all showing increases of just 6%. Across the UK, the time taken to save a 5% deposit increased by 13%.

There are only three other regions where it takes less than four years to save for a typical first home deposit; the North East, the North West and Yorkshire and Humberside.