Are first time buyers being too ambitious?

We often report on the problems facing first time buyers on this blog, but Charlie Cunningham, CEO of property developer FreshStart Living, believes there’s a very simple answer to the problem of saving up for a deposit.

“First time buyers don’t have to wait eight or nine years, there’s an extremely easy way that they could half that time,” he says. “They can just purchase an affordable property at half the price. This would halve the deposit, therefore effectively halving the time it takes for them to get on the housing ladder.

“If the average UK house price is £160,000 first time buyers would need a 20% deposit of £32,000. If they purchased an affordable property for £80,000 they’ll only need £16,000 which would take half the time to save. It’s as simple as that and that way it would be more of a sensible purchase and they wouldn’t be saddled with a huge debt.”

Lauren Dean, 27, (pictured) is a first time buyer who bought a two-bed apartment at St Thomas Place in Stockport for £70,000. “I don’t understand why other first time buyers save for years and years for a huge deposit so they can buy a fancy, overpriced property,” she says. “They are just wasting money on rent, when if they chose to move in to a more affordable property, they would need a smaller deposit, they could move in sooner and the money they would have spent on rent can go towards a mortgage.

“In a few years time, as my salary increases, I may choose to move to a more expensive place. But hopefully if property prices pick up, the sale from this place will cover my deposit and I could even make a profit. I think first-time buyers need to realise that if they really want to get on the property ladder, they should stop holding out for their dream homes and swanky apartments because in the long run that sort of thinking will leave them financially worse off.”

Useful web sites for more information
Property Search Engine
Independent property news

Recent Posts on Property

• Your chance to live in Winnie the Pooh's home
• How can the mortgage market recovery be helped?
• Where do most millionaires live in the UK?
• Wandsworth tops aspiring young professionals hotspot list
• Record home price rises (and not just in London)

• grey_gorilla

  You resort to other stuff to make ends meet – or you use to. Unfortunately that ‘other stuff’ (part time working, piece working) is being used to take up the slack in the current unemployment figures. The only jobs that cannot be truly offshored are ‘grunt’ jobs – physical stuff, where the person has to be there to do the job.

  Perhaps in the next few years we wil see supermarkets with all self-service checkouts being monitored by CCTV watched over by people in a far-off continent, with just two security guards (third party company) wired into the system to detain the shop lifter/dishonest person. The security guards will also be restocking the shelves.

• Pacificweather

  Wait until she gets her next year’s service charge bill. It will probably be twice the estimate she was given. As a result the apartment won’t rise in value and she will never save enough to staircase to 100% ownership or buy a house when she needs one.

• alexx2

  Salaries are roughly speaking around half of the UK, for locals of course. Ex-pats are higher in demand and get salaries more comparable to the UK. The point stands true, however, that rents or mortgage payments are much lower in comparison to income. Most people spend around 10% of their income on renting a family home here. The UK has a population density of 3x Malaysia, but travelling around the South of England I would say there’s still vast rolling areas of countryside which may be better used to actually give people a place to live. And places with enough room to swing cats!

• VicTheBrit

  Congratulations! A caring landlord – most of your compatriots are not, as is the case here in Japan. Landlords here charge a deposit equivalent to about 10 months rent – on average about £5000. Landlord will pay back between 50 to 70% upon vacation, some of the remainder is used to refurbish the house or apartment for the next tenant. People here refuse rentals with worn carpets, damaged walls, old tatami etc. Rentals are usually handled through an agent who pick up a percentage of the rent to carry out repairs but in reality do very little. So moving is an expensive business with movers charging around £1000 or more depending on the distance. Most moving companies aim to do two moves a day meaning the crew work like dogs for their low salary.

• fry_up

  We have the smallest (and probably the ugliest and worst built) new houses in Europe, in one of the most densely populated countries in the world, as we let the population grow (that’s right, I mentioned immigration) while desperately trying to keep green belt.

  Apparently our eye-watering property prices are the very best thing, it means we’re rich. But let’s not get complacent – we’ve got to make things easier for the poor developers because our sustainable economic future depends on knocking down anywhere decent and replacing it with box-like affordable housing, which will need rebuilding itself in 30 years, by which time the mortgage might be close to being paid off.

  You might say it hasn’t been working that well of late, but do you know why? Because we’ve been far too timid. All houses should have a maximum five year life, thereby providing employment to everyone for evermore. How do we pay for this, you ask? Well, as a clever chap called Keynes pointed out, since we’re fully employed, we’ll all be much better off, but if that isn’t enough (and it will be), we should aim to double the population every 50 years or so. Property prices will tear away and we’ll all have plenty of easy money. This economic miracle is ours for the taking! If we play our cards right, every waking hour would be engaged in alternately building and demolishing our homes, before we collapse, exhausted but happy, into our space-saving upright bed-pods.

• http://www.facebook.com/amjed.munir.7 Amjed Munir

  awesome comment ….. the only ones constantly wanting the bubble to inflate more are those who own a house …… It is just tragic that people cannot afford the basic human right of their home …
  Your home is your home .. and should not be seen as investment stock
  I would suggest ..
  no taxes on the buying the first home
  and higher taxes and charges on any subsequent houses bought
  The Gov Must help people to get a home and be debt free
  or do they prefer a nation of mortgage slaves

• http://www.facebook.com/amjed.munir.7 Amjed Munir

  Awesome comment … Interest only mortgages are a ticking bob which will go off when people cannot afford to pay of the capital
  Artificially low interest rates propping up unaffordable house prices
  will not help anyone .. alot more pain to come

• Rebecca

  Yes, it is expensive if you are only intending to stay in the property for a year or two but after handing over 360,000 yen that I doubt I’ll get anything back from, I’ve been living in a three room apartment in the centre of Osaka for 10 years paying 10% of my net salary in rent. Yes, I cohabit, but compared to the 1,000 pounds that couples are paying for a one bed in a dodgy part of London, the rent in Japan is certainly not extortionate.

• AvatarIII

  I am paying rent, but not as much as a would be paying if I weren’t living with my girlfriend’s parents, and at least I know the people it is going to. I’m paying £325 pcm including all bills, studio flats go for around £400pcm without bills, so saving me around £1200+ per year