Budget 2021: What does the 5% deposit option look like to Manchester’s ‘Generation Rent’?
I analysed three areas of Manchester to see how the new loan scheme would square up in actual figures — and whether this was still affordable
The recent announcement by Chancellor Rishi Sunak will be a relief for young people looking to get onto the property ladder.
Though for many, their aspirations of becoming homeowners are still dampened by high costs of living, a saturated graduate job market and uncertainties posed by the pandemic.
Over the past 20 years, average house prices across the country have risen by 80 percent, with Manchester seeing the greatest increase of 143 percent — the average cost of a home has soared from £73,910 to £179,537, according to the financial website This is Money.
What would 5% look like? Let’s crunch the numbers
Property data from sale histories on Rightmove confirmed the trend, with three samples being taken from different parts of the Greater Manchester region.
The greatest increase in property value from the samples taken was seen in M25, (covering areas such as Prestwich near Bury). In 1999, a 3-bed semi-detached property was worth £47,000. In 2020, it was worth £260,000 — that’s an 81 percent increase (Figure 1). To secure a 5% deposit, potential buyers would need to rake together £13,000. For a couple, assuming 50/50 input, that’s £6,500 each.
A 5% deposit needed for a 1-bed semi-detached house in M11 area of Manchester comes to £5,500 — in 1995, the house price was £28,000. In 2020 that figure rose to £110,000, a 74% increase (Figure 2).
Research conducted by the financial technology company Revolut found that millennials in Manchester were able to save on average £161.26 a month (the average salary is £29,000) but factors such as insecure employment and student debt still posed barriers for young people wanting to buy homes. Based on this figure, it would take 3 years to save for a £5,500 deposit.
According to the Office of National Statistics (ONS), of people aged between 22 to 29, only 10% have savings of £2,000 to £3,000. For those who have saved enough to afford half of the above 5% deposit (£6,000), the figure is slightly higher — around 25%.
For George*, 22, the option of having a 5% deposit is a welcome move, but he thinks more should be done to help young renters, rather than trying to convert ‘generation rent’ into ‘generation buy’.
George graduated from university last year, and currently works as a catering assistant. Though he doesn’t work full-time, he estimates that his salary would be roughly £20,000.
Having rented at university, George has since moved back to his childhood home in Sale, Manchester (M33) with his parents — the pandemic and the graduate job market both being factors.
He saves about £350 a month but tells me this is only because he’s not paying rent at home, and he doesn’t have a car to pay for. He estimates the current value of his home is £320,000 to £350,000 — a figure similar to the one found on Rightmove (Figure 3).
If he ever wanted to buy his childhood home, he’d have to save £16,750 to secure the 5% deposit. Even with help from the Bank of Mum and Dad, this seems like a big ask.
But for George, this won’t be an issue — he says it’s not a priority for him to become a homeowner and points out that getting onto the property ladder isn’t a priority for others his age.
“I would rather have efforts focused on landlords and giving greater protections to young renters,” he says. “Realistically, not every young person wants to settle down with a mortgage. Gone are the days when you would stay in the same job for a long time.”
George doesn’t want to stay in Manchester and says that for young people like him, being able to move with the current job market means that renting is the most practical option.
*Names have been changed
