Answering an Instagram post by @thebankengine about people being vilified for having take-away coffees when trying to save for a house.

He has missed the point, or was maybe just trying to get people to respond to his post.  

So, I’ll take the bait, and responded.  

While I appreciate that you’ve done some homework on the numbers, I don’t accept them fully as I see some disparity as a former financial analyst and new homes sales agent.  The £62k disparity is not the figure that people will be aiming for.  You state that the average house price is £292,864 … yet you say the average deposit required is £62,470.  This would be a deposit of over 20%.  So those numbers don’t stack up to me … or are from different sources, quoting different things.

I’ve sold new builds for 15 years now and using my numbers : 

The average 1 bed flat in outer London and Home Counties (or 3 bed house in the Midlands) is about £350,000.  The 5% deposit required is therefore £17,500 … not £62,470.

I accept that people should not be vilified for drinking take-away coffee and enjoying themselves.  I would urge them to have their coffees (where possible) from a local cafe rather than a big corporate and faceless entity.  I also accept that the disparity between wages and house prices is way off of what it was in the past. You say that this difference isn’t blamed enough and I agree with you. 

Wages have risen (or not) year on year, on par with other western countries, so there is no real anomaly there, while the problem is that our house prices in the UK have shot up over the last 25 years. 

This difference has 2 very clear root causes

  1. House builders are not building enough houses annually (see my recent posts) – circa 250,000 new homes per year
  2. Towards the end of the 1990s immigration began to rocket up from a net average of 50k per year to now over 700k (2022) per year

These 2 factors alone create and clearly demonstrate supply-and-demand.

Going back to the take-away coffees, etc … it, simply, stands to reason that if someone is wanting to buy a new home in 2023, and the prices are so high, then the way to help in achieving this is to cut back on the unnecessary financial outgoings of that household.  It’s not a new concept that ‘‘you can’t have everything in life’’.  Sometimes you have to sacrifice.  We live in an instant gratification, consumer driven, world where people are sucked in by the pretty colours and marketing strategies.  Releasing yourself from all of this consumerism is not just financially prudent, but cathartic and freeing.

Looking at a simple sample of a few outgoings you could easily save 20% of your deposit by cutting out a few items from your daily (weekly, monthly) routine.  You can change the items for whatever you like, you will still get good results.

The Average 1 bed London flat £350,000 (or 3 bed Midlands house)

Deposit Required (5%) is £17,500

DailyWeeklyMonthlyAnnual% of Deposit
* Annual is a 48 week ‘work year’ for coffee and lunch

If you are thinking to buy a house, it’s always better to start your savings routine now.  Try to put away 10% of your net income into a savings account, especially as we are beginning to get better saving rates again.  Saving is not easy and takes discipline.  Then again, nothing worthwhile is (or should be) easy. 

Stuart Loveday

By SJ Loveday