For Britain’s aspiring FTBs, homeownership has become a moving target. New market analysis from Moneybox, the award winning wealth management platform, reveals “The Moving Finish Line”: the additional months buyers must spend saving just to close the gap created by house price inflation.
Analysis of ONS data shows that a typical buyer earning the national average wage and saving 20% of their net take-home pay in 2021 would calculate a 4.5-year timeline to secure a 10% deposit on a standard £228,000 home.
However, by the 4.5-year mark, house price growth would have pushed the cost of that same home £37,250 higher, moving their deposit target out of reach. Even for the most committed first-time buyer, this would leave them facing a £3,541 shortfall on their deposit and another 9 months of saving just to catch up. Moneybox’s analysis assumes a first-time buyer saving 20% of their net take-home pay each month into an account paying 2.00% AER. But where buyers may be earning less interest, saving smaller amounts, or targeting a more expensive home, the “Moving Finish Line” can scale brutally.*
This comes despite savers putting away more than ever. Moneybox’s FTB consumer research shows average monthly contributions have jumped from £344 in 2023 to £475 today, yet many buyers still feel they are falling behind.
Behind the numbers is a generation of buyers watching their timeline to home ownership grow ever longer. In Moneybox’s survey** of 2,000 aspiring FTBs, 71% say their savings journey will now take longer than originally planned, with buyers now expecting it to take an average of 4.5 years to achieve homeownership, up from 4.2 years in 2023. The cost of living (47%), rising house prices (39%) and rent absorbing too much of people’s income (34%) are the most cited reasons for this.
Due to this, nearly two-thirds (63%) have revisited their homeownership plans in the last six months. Almost half (48%) have pushed back the date they expect to buy, 29% have settled for a less desirable location than they’d hoped for, and a further 29% have scaled down expectations on property features that matter to them – such as size, a garden or off-street parking.
Brian Byrnes, Director of Personal Finance says: “We speak to first-time buyers every day. Most are dedicated to their ambitions and saving habitually, but the frustration is obvious when it feels like the goalposts are constantly shifting. Even with interest rates working in their favour, house price growth is still edging ahead of the average saver.
“The most effective way to outpace the market is to ensure every single pound is working as hard as humanly possible from day one. Utilising a Lifetime ISA is a fantastic way to do this, giving you a 25% boost on your savings paid monthly, which means up to £1,000 of free money from the government every year to help shrink that deposit gap.
“In particular, ideas like paying the government bonus only at the point of purchase would mean savers miss out on years of compounding growth and visible progress. Without that monthly compounding boost actively working for them in the background, buyers will find it even harder to close the gap on a moving finish line, leaving some needing to save for longer just to reach the same goal.
“Revisit your savings goals regularly to make sure house price growth isn’t leaving you behind, but most importantly – don’t be disheartened. The gap is real, but it becomes more manageable once your savings are working effectively for you.”
