New research from the Halifax has reported that it takes five years to save up for a deposit on a home - almost double the time it took 5 years ago.

Additionally, the number of first time buyers in the UK has reached a new 25 year low.

Halifax said that there were an estimated 320,000 first-time buyers in 2005, the lowest annual total since 1980. FTB’s in 2005 were estimated to be 10% lower than in 2004 (358,000) and 40% lower than in 2002 (532,000). However, Halifax did note that first time buyer numbers did start to pick-up slightly in the second half of 2005.

However, the length of time it takes to save a deposit has shot up. In 2000, the typical deposit was £9,894, equivalent to 42% of the average earnings. Today, a typical deposit is now £23,967, equivalent to 76% of the average earnings of £31,485.

FTBs in Greater London put down the largest deposit at £43,988 (20% of the value of the property) whilst FTBs in Northern Ireland put down the smallest deposit of £12,946 (13%).

Also, the average age of a first time buyer is up. Currently, the average age is 33 years, up from an average age of 31 years in 1995. The proportion of those aged 25 and under buying their first home remains low, at just 15% of FTB home purchases. In 1995, 24% of FTBs were younger than 25.

Affordability
Halifax research found that a typical FTB was unable to afford a semi detached property in 87% of post towns in 2005 (424 out of 486), compared to 41% of towns (199 out of 486) in 2002. Terraced properties were unaffordable for first time buyers in 50% of towns in 2005 on this basis, compared to 28% of towns in 2002.

Almost three quarters of properties purchased by FTBs in 2005 were terraces (42%) and flats & maisonettes (32%).

Gerrards Cross is still the least affordable town for a FTB where the average property price is 17.8 times the average income of a FTB.

Nelson in Lancashire is the most affordable town in the UK for a FTB with an average property price 3.3 times higher than a FTB’s average income.

First time buyers spent less than £100,000 on their first home in only two regions of the UK ? Scotland (£92,880) and the North (£97,932) in 2005.

Tim Crawford, Group Economist at Halifax, commented: “First time buyers need to save harder and for longer than ever before so as to put down a decent deposit on a house. This explains why the number of first time buyers entering the market was close to record lows in 2005.”