First-time buyers are spending an average of 23 per cent (£44,240) more than they budget for on their first home, according to new research from Zoopla. The property website found that first-time buyers estimate they will spend an average of £167,359 on their home, but the actual cost comes to £211,599 – a difference of nearly a quarter of their original budget.
Zoopla polled recent first-time buyers and those intending to purchase a property in the UK and found that those in London have the biggest ‘reality gap’. In the capital, house-hunters budget £259,158, but end up shelling out a total of £386,667 – a difference of £127,509 (39.49%). This is followed by the North (£43,871 – a 30.78% difference), the South (£46,900 – a 24.01% difference), and the Midlands, with a more modest £12,205 gap (7.75%).
The research highlights that this ‘reality gap’ begins with saving for a deposit, revealing that first-time buyers underestimate how much they will need to secure their home by an average of nearly £3.5k or 16.17%. London tops the list as the region with the biggest disparity between estimated and actual deposit costs, with the average first-time buyer missing the mark by £9,250. In the South buyers fall short by 4,511 and this is followed by the North (£2,830), and the Midlands (£1,221).
It’s not just the financial burden of buying a first home that is underestimated, but also the amount of time it takes to save for a deposit. The research revealed it takes the average first-time buyer over two years (26 months) to gather a down payment – four months longer than those intending to buy their first home predicted (22 months). Londoners, take 10 months longer to reach their target (30 months), meanwhile Northerners are more realistic in their expectations with it taking just two months longer than anticipated – a total of 24 months.
Original source - https://www.zoopla.co.uk/press/releases/the-reality-gap-firsttime-buyers-spend-per-cent-more-than-intended-on-their-property/