Last updated 05:40, Friday, 26 September 2008

First-time buyers think they need to save nearly £20,000 in order to get on to the property ladder.

Window shopping: But few first-time buyers can raise the deposit needed to get onto the property ladder in today’s challenging economic climate

The average first-time buyer thinks it will take them two years and they will need to save £19,100 before they can think about buying their own place, according to The Co-operative Bank and Places for People.

The current housing market downturn appears to have done little to deter potential buyers, with 54 per cent saying they still think renting a property is throwing money down the drain.

A fifth also said they were optimistic that prices would rise over the long term, while 30 per cent said a property should be seen as a home and not an investment.

Around 46 per cent of people said they had had to lower their expectations about the property they wanted in a bid to get on to the housing ladder.

Half said they would forgo a garage or an extra bathroom, while 40 per cent were willing to compromise on the number of bedrooms.

But 80 per cent would not compromise on room size or location, while 78 per cent felt the same way about a garden.

The proportion of first-time buyers making sacrifices in order to get on to the property ladder has increased sharply during the past year, with just nine per cent now saying they were not prepared to compromise their lifestyle in order to buy a home, up from 57 per cent 12 months ago.

Half of people said they were forgoing eating out and having holidays abroad in order to become homeowners – double the figure last year – while four out of 10 are also buying fewer new clothes, cutting down on buying coffee and lunch from shops and reducing their alcohol consumption.

One in five are making more drastic lifestyle decisions, such as delaying having children or getting married in order to buy their own home, while 11 per cent have taken on an extra job.

Just half of first-time buyers said they thought the Government should do more to help people buy their first home, with only a quarter thinking the onus should be completely on them, while 19 per cent thought the private sector should offer increased help.

Victoria Drummond, of Ownhome, the shared equity scheme run by The Co-operative Bank and Places for People, said: “This new research shows that the dream of owning a home is now out of reach for many first-time buyers, as they struggle to save for a deposit, against a backdrop of soaring household bills and the increased cost of living.

“The Government and the housing industry must continue to offer simple, clear and innovative products that provide first-time buyers with the essential financial support needed to help them onto the property ladder.”