£50,000 deposit to buy average house (From Essex County Standard)

£50,000 deposit to buy average house

7:00pm Monday 20th August 2012 in News By Andrea Collitt

COLCHESTER homebuyers must find an average of £50,000 for a mortgage deposit, shock new figures reveal.

The National Housing Federation statistics show the average house price in the town has gone up from £114,956 in 2001 to £202,811 last year.

Wages have increased by only 25 per cent in that time, with the average worker taking home a salary of £20,545.

A decade ago, banks were willing to take deposits of 10 per cent of the value of the property. Now, many require up to 25 per cent.

As a result, the average deposit has leapt from £11,496 to £50,703.

That would take a buyer with no previous mortgage 29 months’ salary to save up for. John Samuels, of Turner Rise, Colchester, has been renting, but is about to move back in with his parents to help him save up for a mortgage.

The former estate agent said he has spent nearly two years saving for a deposit and will be saving for another seven months.

John, 30, said: “It is very, very difficult. You need a 10 to 20 per cent deposit for a mortgage at the moment so you are talking about £20,000 to get on the ladder.

“At the end of the day house prices are going to go up and down, people’s earnings go up and down and the real issue is the lenders.

“They had their hands burned before when there were 90 per cent mortgages and now they have gone too far the other way, but need to lend more readily again.”

Colchester sits 12th out of 14 on the list of Essex local authorities ranked by the biggest rise in the gap between average house prices and wages.

Average Tendring house prices rose 82per cent from £93,412 to £170,285 in the same period while wages increased just 31 per cent from £12,376 to £16,250.

The deposit needed to buy a Tendring home rose from £9,341 to £42,571.

Kate Dodsworth, assistant director at the National Housing Federation, said: “A shortage of homes means the price to buy them is being pushed ever higher by the market, and out of reach of millions of hard-working families.”