04 May 2022

Home truths: Rising cost of living forces first-time buyers to put plans on ice for now

  • 70% of hopeful homeowners delay purchases by average of nearly two years due to cost pressures
  • 88% of prospective first-time buyers worried living costs are harming efforts to save deposits
  • 48% reduce amount they save towards a deposit and 38% repurpose earmarked cash
  • 69% willing to relocate to another part of the UK in order to get more for their money
  • 65% say they need to buy with someone else to be able to afford a property
  • Saving to move: 43% reduce socialising; 36% sell items and 12% shelve family plans
  • Nationwide offers £500 cashback to first-time buyers who complete their mortgage with Society

Seven in ten (70%) people looking to buy their first home in the next 12 to 24 months are delaying purchases as the rising cost of living impacts their ability to save towards a deposit, new research1 from Nationwide Building Society shows.

On average, prospective first-time buyers say they will delay buying a home for nearly two years, with 19 per cent saying they are pressing pause on their homeownership aspirations for more than three years. The South West (23%) and Wales (28%) are the areas where potential homeowners are most likely to delay that purchase for more than three years.

The poll of more than 2,000 people who are looking to buy their first home within the next five years reveals a deposit is the biggest hurdle, with 28 per cent claiming it is the most difficult part of home ownership to overcome. Indeed, a 10 per deposit on a typical first-time buyer home is at nearly 60 per cent of gross annual income – a record high2.  By contrast, just 14 per cent say it’s the ability to borrow enough and 12 per cent believe keeping up with mortgage payments to be the main challenge.

Nationwide’s research shows that around nine in ten (88%) have had their ability to save for a deposit impacted due to the rising cost of living. This rises to 93 per cent for Scotland, 98 per cent for Wales and 98 per cent for Northern Ireland. Even the lowest UK region - Greater London - records 82 per cent.

That has led to close to half of those impacted (48%) reducing the amount they save towards their deposit, with more than a third (38%) using the money already earmarked as a deposit to pay towards other bills.

Nationwide’s poll was carried out by as part of the Society’s efforts to support those looking to get onto the housing ladder during a period of high house prices and rising cost of living. This includes a range of low deposit mortgages, the opportunity for first-time buyers to borrow up to 20 per cent more3 through the Society’s Helping Hand mortgage, and £500 cashback. Britain’s biggest building society has also launched a new first-time buyer resource to help people navigate their specific housing journey and offer a range of guides and information to help support that.

When asked whether 2022 is a good time to buy their first home, those starting out are very much split - 51 per cent disagree while 49 per cent agree.

Of the main problems noted by people about buying a home in the area they live in, nearly three in five (57%) said it was high house prices, while 43 per cent said rents were too high to be able to save. Nearly a quarter (24%) said their area had a competitive housing market, while the same amount (24%) said there was a lack of homes on the market.

The current pressure on finances is making people consider moving to other areas, according to the poll. Around seven in ten (69%) are willing to relocate to another part of the UK in order to get more for their money, with 65 per cent willing to do so in order to get a bigger property. This is highest for those living in Greater London (79%), where prices4 are the highest in the UK by some margin.

The ways would-be first-time buyers are cutting costs to try and get that first home include:

  • 47% reducing everyday spending
  • 43% cutting back on going out or eating out
  • 37% lowering household bills by shopping around
  • 36% selling things they own
  • 35% cancelling unused subscriptions
  • 23% saving into an account rewarding homebuyers (e.g. Lifetime ISA, Help to Buy ISA)
  • 21% benefiting from cashback from spending on card
  • 20% using a savings or budgeting app
  • 17% taking an additional job
  • 12% putting off starting a family or adding to it

According to the poll, the average age prospective first-time buyers hope to buy their first home is 27. However, three in ten (30%) say it is unlikely they will be able to purchase a home by the age they hoped, with a third (33%) admitting they’ve already gone past that age.

The struggle to get onto the property ladder is also driving people to think about buying with someone else to help make that first home purchase a reality. Nearly two thirds (65%) believe they need to have someone else alongside them, such as a friend, family member or partner, to be able to afford to own a property and that figure is mirrored in reality with 66 per cent admitting they were planning to buy with a partner or spouse – only 24 per cent said they were going to buy alone.

The deposit:

The average amount saved by prospective first-time buyers towards their home is £14,700 – with men having saved more (£17,028) than women (£13,394). This peaks at £21,071 for Greater London, and is lowest in Northern Ireland, at £7,065 – around three times less. While nearly a quarter (23%) have saved £20,000 or more, just over a third (37%) have managed to save £5,000 or less.

To get there, people have been saving for around three to three and a half years on average. In fact, more than four in five (86%) prospective first-time buyers have been saving for their deposit for at least three years, with 14 per cent saving for six or more years. Those in London saving for the longest, at around three and half years. Those in Northern Ireland have been saving the least time, at a shade over two and a half years.

Three quarters (75%) saved their deposit themselves while more than a quarter (26%) relied on their partner. Almost a quarter (23%) received the money from a parent or grandparent – either through the money being gifted or through them releasing equity from their properties, while 13 per cent received the money as inheritance.

Paul Archer, Senior Mortgages Manager at Nationwide Building Society, said: “Building a deposit remains the single biggest barrier to homeownership today, with many people starting out facing a long uphill battle to save. The rising cost of living has made this even harder.

“With high house prices and the rising cost of living, we need to tackle the first-time buyer challenge on multiple fronts. Which is why over the last couple of years we’ve ramped up our support for first-time buyers. This includes supporting those struggling to save much of a deposit through our range of 95 per cent mortgages, or those who need to borrow up to 20 per cent more through our Helping Hand mortgage – which could make a real difference to those with at least a five per cent deposit. In addition, all first-time buyers will receive £500 cashback when they complete their mortgage with us.

“We also know that each person’s situation to buying a home is different, which is why we’re launching our new first-time buyer hub. We want people to be able to use the supporting guides and information to help them navigate their own specific journey to that first home.”


Notes to editors

1 The research was conducted by Censuswide, with 2,051 prospective first-time buyers (people looking to buy in the next five years) in the UK between 08.04.2022 – 13.04.2022. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.

N.B. Prospective first-time buyer is used throughout to refer to these respondents.

2 Source: Nationwide/ONS

3 Nationwide’s Helping Hand gives first-time buyers the option of borrowing up to 5.5x income when taking one of the Society’s five or ten-year fixed rate mortgages. Helping Hand is available up to 95% LTV meaning those with just a five per cent deposit can benefit.

4 London house price data (Q1 2022): UK house price growth surges to its highest level since 2004 (nationwidehousepriceindex.co.uk)