Published on : Thu, 02 Jun 2005 00:00GMT
by : Andy Clarke

The slowdown in the property does not seem to have helped first time buyers. According to a survey by National Savings and Investments (NS&I), first home buyers, especially in Northern Ireland, need to save sooner and harder and for longer to be able to get on to the property ladder.

The NS&I report makes a quarterly comparison and finds that Northern Ireland has seen the biggest rise in the time it takes to save enough to place a 5% deposit for a first home. People here require nine months more than they did (four years) in the third quarter of 2004. To buy a house worth £147,127 they are required to save £7,356.

The current slowdown hasn’t meant houses have become more affordable to more people. On the contrary, the average house now costs 16.5% more (in some places, houses were 22% dearer) than it did a year ago. In the North Ireland province, the current average price of a house peaked at £122,661 according to the House Price Index from the University of Ulster. Thus, first home buyers now have to organise (read ‘save’) an additional £1,000 for a deposit, while their incomes have not increased correspondingly. Salaries marked an increase of 0.5% during the same period. Savings rate and incomes were clearly outstripped by house prices over the last year.

In the starter band of £50,000 to £100,000, there were fewer houses than last year.

The worst affected, according to the NS&I report, were first home buyers in East Anglia. Here people needed five years (six months more than they did same quarter last year) to be able to save enough for a deposit. The only region that was below the four year level was Scotland where first home buyers required three years nine months to save for a deposit.

The decline in savings is believed to be a result of consumers doing more to tackle their debts. According to figures from the British Bankers Association, net borrowing on credit cards during April, dropped for the first time in ten years. Personal loans also reduced considerably.