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Housing deposits rise tenfold in 20 years

Monday, 19 September 2011 1:31 PM

A combination of higher house prices and restricted mortgage lending means that buyers need a deposit almost 10 times bigger than 20 years ago, according to new research for First Direct.

The average deposit rose from £6,793 in 1990 to £65,924, an increase of 9.7 times over a period in which the average household income has risen only 2.5 times.

Market conditions were at their easiest after the last recession in 1995 and 1996 when the average household income was more than three times the average deposit.

However, this recession has been far harder, especially for first-time buyers, and 2010 was the most difficult time to buy a home in the last 20 years.

Since 2007 the average deposit has increased by £22,451 and the average age of a first-time buyer has risen to 37.

Bruno Genovese, senior savings product manager at First Direct, said: "Much has been made of rising house prices, but the average deposit needed has actually risen more than twice as fast as house prices and almost four times as fast as income. In this climate, it really is important that people save as much as they can to raise the money for a deposit.”

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