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Avocado Toast or Home Ownership? Debunking First Time Buyer Myths

Posted in Tips & Guides on by

There's often a huge generational divide when it comes to opinions on the affordability of buying a home, particularly where a younger generation of first-time buyers are concerned. Negative stereotypes abound, with attitudes often expressing contempt for those unable or desperately trying to get a foot on the first rung of the property ladder.

In this blog, we look into some of the possible reasons why it could be tougher than ever for young people to buy their first home, and debunk some myths along the way.

Home affordability in 20204

Commonly Held Myths

Perhaps some of the most pervasive rhetoric centres around Millennials and Gen Z liking luxuries like avocado on toast and expensive coffee shop oat milk lattes a little too much to be able to save for a deposit.

Whilst food and spending habits do of course change over time and spending on takeaways and similar might appear to be a priority to this age group, we shouldn't dismiss the realities of life in the 2020's.

Of course, back in the 1970's inflation hit an all-time high, the work week was slashed to 4 days instead of 5 and we faced shortages and power cuts - recessions and earning squeezes are certainly nothing new.

But let's take a moment to put things into perspective by considering relative annual earnings compared to the cost of the average house along with the wider cost of living, like groceries, rocketing utilities, fuel and vehicle ownership.

Comparing Average Earnings & Costs

According to UK Parliament, in 1974, the average earnings of a British man was £38.10 and for a woman just £19.70, which equates to an annual salary of £1,981 or £1,024 for a woman.

In the same year, the average cost of a home according to Land Registry Data was £8,915 meaning the average home cost 4.5 times the average salary.

Looking at the same figures for 2024, according to the Office for National Statistics, the average annual salary in the UK was £32,393, whilst according to the house price index, the average cost of a home was £299,000. That's more than 9 times the average salary, but of course that's not taking into consideration the very high number of people in low to middle-income jobs who don't earn anywhere close to the UK average.

Consider too, that any twenty or thirtysomething with a university degree, also enters adult life with debt of around £42,100 and with entry-level salaries for graduates often in the low twenties, it's no surprise that affordability is more challenging than ever.

It's easy to see from these figures alone, why getting onto the property ladder is so much more difficult for young people now. Of course, cutting back on non-essential spending is always the best route to saving for a deposit, but in a modern world where mental health problems are at an all-time high and with many people facing shrinking salaries (in real terms), as well as increased pressure on household finances thanks to high energy and grocery costs, let's get real. A bi-weekly latte treat is highly unlikely to mean the difference between affording a deposit for a first home or not!

Other Challenges Facing Young People

It's a simple fact that it is now harder to save for a mortgage deposit, back in the 1990's it could take as little as 6 months of saving to cover the average 10% deposit. According to the BBC, it now takes around a staggering 8 years to save for a mortgage deposit.

Consider too that as recently as 2006, earning 4% on savings was pretty typical. This has since dropped to just 1.5% so even the savings people do have aren't as beneficial as they were a couple of decades ago.

Consider too, student loan repayments, higher living costs and higher rental costs, and it's clear we're doing young people a huge disservice when we dismiss their struggles and label them as simply being bad with money or unwilling to make sacrifices.

These things in general are simply not true and it will take far more than reigning in non-essential spending to put homeownership back in the reach of low to middle-income first-time buyers.

If you want to get into the property ladder or are considering remortgaging, get started by using our mortgage repayment calculator.



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