Homebuyers budgetary expectations are falling short of the amount they will actually spend when moving home.
New research by Post Office Money indicates that on average, additional moving home costs will total £9,472, but buyers will typically have budgeted around £7,643.
Including the conveyancing and estate agency fees, these ‘additional costs’ have grown by a quarter since 2006, and are predicted to rise even further in the coming years; by 2020, forecasts indicate that buyers will face ‘additional costs’ of around £12,267. Just under two-thirds (65%) of buyers are still underestimating the amount they will have to pay for their move.
Given the rising cost of deposits, the pressure to set aside even more money becomes even greater. On the average home, a deposit of around £94,200 is required, a figure which has risen by 36% over the last ten years.
The data revealed that the South East was the area to feel the most impact from the growth of additional costs, with the price of moving rising from £8,809 in 2006 to £15,114 in 2016 – an increase of 72%.
Those most likely buyers to underestimate the cost of moving are in London, despite this cost being the greatest in the UK at £26,673 on average. Prospective buyers here will plan to spend the much more modest amount of £8,838.
Commenting on the findings was Owen Woodley. The Managing Director at Post Office Money highlighted the need for buyers to plan ahead, and account for the cost of moving at the earliest opportunity.
“Forecasts indicate the cost of buying and moving will only continue to rise over the next five years, even with the impact of revised stamp duty rules introduced to reduce the impact on prospective buyers’ wallets. With research indicating that 65 per cent of these buyers have underestimated how much they should budget for these costs, careful and considered budgeting is essential at a time when they are already likely to be financially stretched.
We are aware of the barriers people can face when they are looking to purchase their first home or move further up the ladder. Planning ahead is vital and potential homebuyers should factor in these costs early on to avoid being faced with stressful, last-minute bills. Our continued research into housing affordability has helped to inform our own offering as a provider, having recently introduced a range of 95% LTV deals that are fee free with cashback offers. These are particularly helpful for those with a smaller deposit.”
