"The most effective way to outpace the market is to ensure every single pound is working as hard as humanly possible from day one."
- Brian Byrnes - Moneybox
Aspiring first-time buyers are facing an average delay of nine months to get onto the property ladder due to house price inflation, after new market analysis from Moneybox revealed the "moving finish line."
Analysis of ONS data found 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 nine months of saving 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. However, for buyers earning less interest, saving smaller amounts, or targeting a more expensive home, the "moving finish line" for homeownership can scale significantly.
In addition, Moneybox’s research shows average monthly contributions have jumped from £344 in 2023 to £475 today, meaning that despite savers putting away more than ever, many buyers still feel they are falling behind.
In Moneybox’s survey of 2,000 aspiring first-time buyers, 71% said 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 was the most cited reason for this, with 47% seeing it as a barrier to homeownership, followed by rising house prices at 39% and rent absorbing too much of people’s income at 34%.
Due to this, 63% have revisited their homeownership plans in the last six months, with 48% having pushed back the date they expect to buy, 29% settling for a less desirable location than they’d hoped for, and a further 29% having 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 at Moneybox, said: "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."
