Last year, most property sales in London “involved flats which sold for on average £469,471”, according to RightMove. When a graduate leaves university, they are on average £36,000 in debt, and according to savethestudent.org, the starting wage for a graduate is around £25,000 a year.
So, can university graduates afford to live in London when they’re no longer being supported by Student Finance?
First-time buyers are advised to save at least 5% to 20% of the cost of their first home as a deposit, according to The Money Advice Service. But many graduates have no savings, relying on part-time jobs on top of their student loans just to cover their rent.
That means that – even with a £165,000 one-bedroom starter flat advertised by the low-cost builders Pocket Living Ltd. – a recent graduate would have to shell out £8,250 for a deposit.
Tarun Singh Heer, 22, graduated from Coventry University in June 2015 with a 2:1 degree in Economics, and has only got as far as interviews when looking for a job, most of which start at about £18,000 a year.
On this wage, Heer would find it difficult to get a step on the housing ladder. He is currently living at home with his parents in Ilford, Essex.
“I would love to buy an apartment along the River Thames but that seems so out of reach that it’s almost impossible.”
First-time buyers need to have an annual salary of £50,000 to buy a starter home, according to research by Savills Residential Research. “Home ownership is in general now limited to those who are both income and equity rich,” Associate Director Neal Hudson was quoted as saying in the Daily Mail.
Speaking to The Guardian, The Resolution Foundation warned anyone under the age of 35 that it will be almost impossible for them ever to buy a home of their own.
University graduates may be waiting a long time before they can afford to make the move from renting to home-owning.
By Courtney Noonan and Aimee Boden
Image Credit: Creative Commons