First-time homebuyers in the UK could save a deposit four years faster if they were to place their money in gold rather than cash; the gold-based savings and payments provider Glint has revealed.
Glint’s research indicates that the average first-time buyer saves for 12 years in order to afford the average UK house deposit of £59,000. Analysis of historic gold prices shows that this deposit could be reached in just 8 years (33% sooner), if prospective buyers saved in gold instead of cash savings such as ISAs.
According to the ONS, the average UK house price is £266,000 and recent research from Halifax indicates that the average city home now costs over eight times the average salary, up from almost six times the average salary in 2011.
Glint explains that Generation Rent can take more control over how they save for a deposit for their first home ensuring they can purchase their first home much sooner, which is vital as property prices continue to rise. According to ONS figures, house prices have risen by 13.2% over the last year.
Value of Gold Has Risen Much More Quickly Than House Prices and FTSE 100 Investments
UK house prices have increased by 175% from an average of £96,500 in 2001 to £266,000 today. Over the same period gold prices are up 556% from $275 to $1,803, indicating that savers could have secured a house deposit much sooner by investing and saving in gold.
Gold has also outperformed other investments such as the FTSE 100 which has increased by 28% from 5,537 to 7,078.
Glint adds that alternative currencies are increasingly popular as inflation rises rapidly – already exceeding the Bank of England’s initial 2% target with the Bank expecting to hit 4% this year. In addition, minuscule interest rates and record levels of government borrowing and debt combine to erode the value of sterling and other fiat currencies. UK national debt recently hit £2.2tn – over 99% of GDP.
“There is a huge untapped opportunity for first-time buyers to finally get onto the property ladder by turning towards alternative currencies,” explains Jason Cozens, Founder and CEO of Glint. “Generation Rent finally has an alternative to the seemingly hopeless task of stockpiling a deposit from cash savings such as ISAs as house prices continue to soar to record highs, leaving them at risk of getting left further behind with every month that passes.
“With inflation rising more quickly than expected and minuscule interest rates, the value of sterling is declining, meaning that prospective buyers are forced to save even more than previously to reach the holy grail of a deposit for their first home. By continuing to persevere with cash savings, they are at real risk of pricing themselves out of a home.
“In addition to out-of-control inflation and historically low-interest rates, our cash savings are impacted by the staggering levels of public borrowing and debt. As our cash and savings further decline in value, how are Generation Rent meant to take the vital step of getting onto the first rung of the housing ladder when the value of their dream home becomes further out of reach every day?
“Many first-time buyers feel like they’re swimming against the tide – once they’ve saved enough for their deposit, they find out that it’s no longer enough to secure the home they were saving for. Over the last 20 years, the growth in the value of gold has far outstripped the rise in house prices – saving in gold is a clear alternative for those searching for value and can unlock the possibility of homeownership. Although house prices have increased by 58% since the financial crisis, gold prices have soared 146% over the same period. Gold has also dramatically outperformed many other investments over the long-term, such as the FTSE 100, cementing its position as the asset of choice.
“More recently, the allure of cryptocurrencies captured the hearts and minds of investors and savers but the extreme volatility of these assets – Bitcoin’s value is under half of its April peak – ensures that these assets aren’t a viable option when saving for a home. There are also reports of reluctance amongst some lenders to approve mortgage applications to prospective buyers based on the deposit or income originating from crypto returns, with some applications rejected outright.
“Whilst the value of gold can decline, meaning that its purchasing power can in turn decline, it has proven its reliability as a long-term store of value and prices are steadily climbing back to the highs of last year. Previously, access to gold was extremely limited but the digitalisation of gold with Glint has unlocked the asset to all consumers offering a viable means of saving for the future and even spending gold on an everyday basis.”
Glint has enjoyed rapid growth during 2021, with a 34% increase in new clients looking to spend and save gold – hitting 84,350 clients in August, up from 62,900 at the start of the year. Glint also recently passed a major milestone, processing over $250m transactions since their inception.