Recent research from the Halifax has found that the number of first time buyers in the UK has hit a 25-year-low with only around 320,000 buying their first property. This is the lowest annual total since 1980.
The report also showed that it now takes the typical first time buyer an average of five years to save for a deposit. Five years ago, a typical deposit was £9,894, which is equivalent to 42% of average earnings, but today, a first time buyer can expect to pay £23,967, which is equivalent to 76% of average earnings of £31,485.
It is believed that one in two first time buyers feel that if they do not get on the property ladder soon, they never will, compared with one in four feeling this way four years ago. Low salaries and existing debts are believed to be preventing people from saving for a deposit.
Our view
Prices are just too high. The property cycle is driven by peoples earnings. We have got to wait probably another two to three years for salaries to catch up to springboard another round of first time buyers and then another property price increase cycle further up the ladder.