We all know that inflation and the cost of living has surged in the last few years, but an alarming trend has been occurring since the 1990’s, young homeowners have been slowly decreasing and no longer amount for the majority of home purchases that take place each year.

30 years ago, the percentage of young homeowners buying property made up 66% of the market. Today however, that figure stands at just 41% and has been continuously declining to this from its earlier majority. This means we can predict that the percentage of young homeowners will continue to decrease.

There are a few reasons why we may be seeing this trend. Firstly, the cost of living and inflation mentioned earlier has been increasing, however salaries for younger earner have been struggling to keep up. We would usually expect salaries to rise with the cost of inflation, but this does not seem to be happening as the living wage in April 2024 will sit at £11.44 per hour, meaning on an average 37.5-hour week, the salary would equate to just £22,308, or £1,859 per month.

With the cost of energy rising, along with other things such as groceries, fuel, childcare and many other things, this leaves very little disposable income for earner of the national living wage. This then leads on to mortgage companies wanting deposits of between 5%-20% for a property.

The average property price in England for 2023 was £306,000, compared to 2003 where the average property price was £128,576. Young buyers would now be expected to fork out up to £61,200 as a deposit for their first home. Considering the little disposable income that they have, even if they did manage to get their hands on £61,200 for a deposit, the average mortgage offered is a multiple of just 4.5x the disposable income.

On top of that there is the 35% rule. Your total month expenses should not exceed 35% of your pre-tax income, or in this case you must have a minimum disposable income of £650.65 on the example we have used above. That means the average young person has just £1208.35 to pay all of their bills, gas, electricity, water, phone and internet, TV license, car finance, car insurance, childcare, council tax, groceries and more.

So, lets do the math. With lenders then only looking to borrow up to 4.5x of the income, meaning even with a £61,200 deposit, the bank would only lend £100,386, meaning the property price you are looking at borrowing on should be £161,586 or lower.

All in all, this means getting on the property ladder is tough for the younger generation. But fear not, Smart Auction UK is here to help! Many people chose auction, and although not all properties here are sold for a discounted price, many of our listings are from investors, probate sales and foreclosures. With 1 bed apartments in great turnkey conditions starting from £10,000, with an expected sell price of £19,000. Yes, you really can buy your own home from just £10,000! And with property prices increasing the way they are, you and expect your property price to double within 2 years, leading to a £10,000 profit by the end of 2025. You then have £30,000 deposit for your next property, which with then increase continuously. Once you get on that housing ladder property prices will continue to increase meaning that your investment will continue to increase, and you can be looking at a much larger deposit than your disposable income will allow.

If you’re not sure on how to get there and need some help, we are here every step of the way to guide you and get you on the next rung of the ladder. Contact us using the button below and we can help you find a property within your budget, no matter how low. If you’re looking for more bang for your buck, we can find you a do-er up-er to pour your heart into and sell on for a hefty profit, getting you further up the property ladder in a shorter space of time.

Stop believing that being a homeowner is just a dream. Now is the time to turn your dream into reality.

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