Young Scots face years of saving for first home deposit

Some Scots could take up to a decade to save up for the deposit for their first home, BBC Scotland analysis suggests.

A person on typical wages saving 10% of their take-home pay a month could take almost eight years to save up a 10% deposit for the average property.

And in some areas with higher property values, like Edinburgh, it could take more than a decade.

Shelter Scotland said young people were "stuck in a very difficult place" between rising house prices and rents.

BBC Scotland is examining the lives of Generation Y, the millennials born between 1980 and 2000.

Coming of age in the wake of the financial crisis and years of steadily rising house prices, this group has faced a much more difficult path into the property market than previous generations.

This has left many in the private rented sector, struggling to save up for a deposit while dealing with rising rents.

A National Savings and Investment survey earlier in 2017 found that 63% of those aged 16 to 24 and 61% of those aged 25 to 34 were saving up either for a deposit for a home or for home improvements.

They found that those 25- to 34-year-olds saved £132.63 per month, on average - roughly 10% of their monthly take-home pay of £1,341. The 16-to 24-year-olds saved at a slightly higher rate, potentially due to more of this group still living at home.

BBC Scotland analysis applied this 10% savings rate to pay levels in various parts of Scotland, assuming a 35-hour full-time working week, and then put that up against average house prices in those same areas.

With the money going into savings with an interest rate of 1%, it would take a first-time buyer several years to save up enough money for a 10% deposit.

In Edinburgh, this could stretch to more than 11 years; in Perth and Kinross, almost 10 years; in Aberdeen, almost eight years; and in Glasgow, more than six years.

Shelter Scotland said young people were increasingly caught between rising property prices and increasingly expensive rents.

Director Graeme Brown said people were "stuck in a very difficult place", with home ownership "often actually just a dream".

He said: "We know that in terms of buying a house, that's out of reach for most people on average wages.

"You have to have a 10% deposit, and of course prices have risen steadily over the past five or ten years, even since the great financial crisis prices have gone up.

"On the other hand social housing simply hasn't been built at the rate we need it to be built at, so people have been forced into the private rented sector. That's their only option. And that of course means private rented sector rents have risen because there's so much demand."

Scottish government analysis has shown that rents for properties in the private sector increased by more than 10% over the six years from 2010 to 2016. Even a single bedroom in a shared property has increased from an average rent of £300 in 2010 to £340 in 2016.

And a 10% deposit may not even be enough to buy - a recent review of first-time buyers by Halifax found that the average deposit in Scotland was closer to 16% of the overall purchase price.

Mr Brown said the situation was "absolutely" getting worse, with the increasing difficulty of sourcing a deposit amid "stagnating" wages - often while still paying rent at the same time.

He said: "The only way people can usually do that is through the famous 'bank of mum and dad', but for those people where that's not an option, they are really going to struggle.

"There's no doubt that young people will look now at the home-owning market and say, that's not going to be a reality for me. Whereas 15, 25 years ago most young people would have the aspiration at least to actually become a home owner.

"Home ownership is not for everyone, but young people just simply don't have the choices these days. That's the issue.

"I think the housing market in a sense is a reflection of how we've reacted to young people. Young people are actually now paying the price for the great financial crisis. That's going to be a long time until that's sorted."

The latest NS&I Quarterly Savings Survey was conducted by Populous, across 2,018 adults from England, Wales and Scotland between 3 and 5 February 2017.

As part of the Generation Y series focusing on the lives of millennials, BBC Scotland is hosting a live Facebook debate in Glasgow on Friday. Send your questions and comments in via social media at #BBCGenY or via [email protected].