Is Buying a Home Still a Priority in 2024?

Becoming a first-time buyer is expensive. The most expensive it has been in the last 70 years in fact - and it doesn’t seem to be getting better. Soaring rents, living costs and mortgage rates are leaving many households around the country struggling.

Earnings have not kept up with house prices either. According to a report by the Building Societies Association, buying a home requires two above-average incomes, meaning it’s becoming increasingly difficult for first-time buyers to save for a deposit and actually get their feet on the property ladder.

Research by Skipton Group revealed the overall affordability score for buying a house in the UK is 22 out of 100, and that only one in eight renters can afford to buy a home in the area they live in. The affordability score looks at not just the cost of buying a house but also the costs of living in a house and running it too. This includes mortgage or rent costs and utility bills. Their Housing Affordability Index, compiled by Oxford Economics, claims that those who rent are four times less likely to be able to buy than homeowners. Separate research from First Direct said that a third of private renters who had recently experienced a rent increase are too financially squeezed to be able to put anything away into their savings. 

That said, we commissioned a survey to find out more about first-time buyers and whether buying a home was still a priority as the cost of living continues to bite. We wanted to know more about what our respondents’ current living situation is like, whether they plan to buy a home in the future and if buying a home is no longer a priority, what they’re prioritising instead. We also wanted to find out whether they’re able to save and if so, how they are planning to save for a deposit. Other focuses centred around what people are concerned about when it comes to affordability, their reasons for wanting to buy a home and how they plan to make buying a home more affordable.
 

Key findings

• Nearly a third (32%) live in council-owned or housing association (HA) property and 49% rent privately
• Just 19% live with their parents or other family members
• Nearly a quarter (22%) say they want to buy a home but can’t afford to save for a deposit and 14% don’t think they’ll ever be able to afford to buy a house
• 13% have no plans to buy a property
• 46% said they weren’t going to use any government scheme to help them buy their first home, despite 7% saying that they’re concerned about a lack of help and support available for first-time buyers
• Over half (52%) are prioritising things such as putting money aside for their future, travelling, experiences and buying a vehicle over buying a home
• 29% want to buy a home as they think it’s a good investment, while nearly a quarter (24%) say they just want to get onto the property ladder
• Over a third (36%) are concerned about the lack of affordable housing available for first-time buyers
• The ability to save for a deposit - without help - is preventing 14% from getting onto the property ladder
• A third (33%) are cutting down on travelling and experiences so they can afford to save up for a deposit
   

What is the current living situation for people who haven’t bought a home?

We were keen to find out what the living situation is currently like for people who haven’t bought their home. 

Our results showed that nearly a third (32%) currently live in council-owned or housing association (HA) property, while nearly half (49%) rent privately and just 19% live with their parents or other family members. 

With latest figures from the Office for National Statistics showing that private rental costs in the UK have risen by nearly 10% in the last year, it’s no surprise that so many people are struggling to buy a home. 
 

Buying a home and saving up for a deposit  

With costs increasing for households, we wanted to use the survey to find out whether people actually still want to buy a home, and if so, are they able to or are there barriers stopping them from going ahead. We asked respondents to select which statement best described their current attitude towards buying a home right now. 

Almost two-fifths (39%) do want to buy a home and are currently saving up for a deposit, while nearly a quarter (22%) would like to buy a home but aren’t able to save a deposit. Sadly, 14% would like to buy a home but don’t think they’ll ever be able to afford it. 

Interestingly, 13% are happy renting and another 13% revealed that they have no plans to buy a home. This shows that priorities have definitely changed and that is most likely down to rising costs, high inflation and low earnings. 

Saving for a deposit is often one of the most challenging aspects of buying a home. We asked those surveyed to choose the statement which closely matches their current situation regarding a home deposit. 

Our findings revealed that 35% are saving up for a deposit by themselves, while a third (33%) are saving up with a partner or spouse. Interestingly, one in seven (13%) will be using inheritance money to go towards buying their first home and 11% have been gifted all or part of the money by a family member. 

A further 8% aren’t saving up for a deposit because they can’t afford it. 
 

What are some of the reasons why people want to buy a home?

With buying a home still a priority for some, we also wanted to use our survey to find out the reasons why people want to buy a home, and see what that said about the UK population. 

Topping the list is investment, with nearly a third (29%) claiming that buying a home is a good investment. Getting on the property ladder came next for just under a quarter (24%).

Rental limitations came third, as 15% would like to personalise their home and feel that they can’t in a rented property. Other reasons include that people consider renting ‘dead money’, people want to make money by renting the home out once they’ve bought it and others believe owning a home is a sign of success. 

The top reasons people want to buy a home

1. It’s a good investment - 29%
2. Want to get on to the property ladder - 24%
3. Want to personalise or make changes to my home without the limitations you have in a rented property - 15%
4. Consider renting ‘dead money’ - 14%
5. Want to make money by buying a home and renting it out - 9%
6. Believe owning a home is a sign of success - 9%

Are people using government support to buy a home? 

Several government schemes are available to help first-time buyers get on the property ladder including the Lifetime ISA, Help to Buy (mortgage guarantee scheme), Right to Buy and Shared Ownership. We wanted to find out whether people are using any to help buy their first home. 

Our survey found that over half (54%) were using various government schemes. The most common was Help to Buy with 18% saying they will use that, while the Right to Buy came second with 15%. One in seven (13%) said they’ll be using a Lifetime ISA and just 8% will be using a shared ownership scheme to buy their first home. 

Shockingly, 46% said that they aren’t using any government scheme at all to help them buy their first home. It might be that many people simply aren’t eligible, which highlights issues that only the government can solve or that they don’t think it’s worthwhile.
 

What are people prioritising instead of buying a home?

We found that just under half (48%) of respondents said that buying a home is still a long term goal. But what about the other 52%? We wanted to find out what people are prioritising if it’s no longer buying a home. 

Our survey verified that the cost of living crisis is still having an impact on people’s finances, as 16% revealed that they are simply prioritising living expenses. They said that they find it difficult to save and any money they have just goes on bills and getting by. 

Almost one in six (14%) are prioritising their future and are putting money aside in a pension or savings account for retirement. Travelling came third with fewer than one in 10 (9%) saying they wanted to spend ‘spare’ money on trips abroad and 7% want to spend their money on experiences, hobbies and interests. 

Only 6% want to prioritise buying a vehicle, which is no surprise with the costs attached to running and owning a car. 

If purchasing a home isn’t a priority - what are you prioritising instead?

1. Living, I find it difficult to save and any money goes on living expenses - 16%
2. Putting money aside in a pension or savings account - 14%
3. Spending money on travel and trips abroad - 9%
4. Spending money on experiences, hobbies and interests - 7%
5. Buying a vehicle - 6%

Concerns around the affordability of buying a home

The survey also highlighted some of the main concerns around the affordability of buying a home, with some interesting results. 

It’s no surprise that the main concerns centre around costs and the availability of affordable housing. 
Over a third (36%) are concerned about the lack of affordable housing available for first-time buyers, while the ability to save for a deposit - without any help - is preventing 14% from getting onto the property ladder. 

Fewer than one in 10 (9%) are worried about fluctuations in house prices and having to buy a home at an inflated price. A further 9% are, unsurprisingly, worried about mortgage costs and being able to keep up with their repayments. 

Echoing the Skipton report that found only one in eight renters can afford to buy a home in the area they live in, respondents are worried about having to move away when they buy a home. 8% say that they’re being priced out of the area where they grew up. The survey highlighted issues within government as 7% worry about the lack of help and support available for first-time buyers. 

Interestingly, 5% say that while they feel they can buy a home, it’s the ability to afford rising utility bills that are causing the most concern. 

Only 6% of people had no concerns whatsoever when it comes to the affordability of buying their first home.

What will people do to be able to afford to buy a home?

The rising cost of living has put a strain on many households’ spending. We’re currently living through a cost of living crisis, and as many household bills, such as water, broadband and council tax, have risen significantly, we wanted to know what people will do to achieve their goal of buying their first home.

It’s no surprise that nearly half (49%) would try and make buying a home more affordable by saving for a deposit with a spouse or partner. 

Verifying worries about being priced out of the area they grew up in, over a third (35%) would consider moving away to a more affordable area. A third (33%) would look at buying a smaller or alternative property type to make buying a home more achievable. 

Another third (33%) would consider cutting down on travelling and experiences so they can afford to save up for a deposit, while a quarter say that they would buy a home with a sibling or family member.

Interestingly, almost one in five (19%) said that they’d actually consider buying a home with a friend, and 16% would get rid of their vehicle to afford a home. 

What will people consider doing to make buying a home more affordable?

1. Collectively save for a deposit with a spouse or partner - 49% 
2. Consider moving to a more affordable area - 35%
3. Look at smaller or alternative property types - 33%
4. Cut down on travelling and experiences - 33%
5. Consider purchasing a home with a sibling or family member - 25%
6. Consider buying a home with a friend - 19%
7. Get rid of my vehicle - 16%

Commenting on the results, Liz Hunter, our Commercial Director said:

“Despite the financial strain faced by many households, homeownership remains a significant aspiration for many. However, the escalating cost of living and rising interest rates have made this goal increasingly difficult to achieve.”

“It's great to see people getting creative and trying different things, like saving with friends or family, moving to a cheaper area, or considering a smaller property, which can all make home ownership more attainable in today’s challenging market.”

“Nevertheless, the government must acknowledge the growing affordability crisis and take decisive action to support first-time buyers. This includes increasing the supply of affordable housing, expanding government assistance programs, and implementing policies that promote sustainable homeownership. With the recent change in government, there is hope that these measures will be prioritised and implemented to help individuals realise their dream of owning a home.”

“Here are some of my tips on how to build up your deposit pot sooner rather than later:”

1. Open a Lifetime ISA, if you haven’t already got one

A lifetime ISA is a savings account that you can use to save for your first home. The government will provide you with a 25% bonus on what you put in every year, at a maximum of £4,000 per year. This means, if you put the max of £4k in, you’ll get a £1k bonus.

However, you must have money in your lifetime ISA for at least 12 months before you buy a property. If you’re a year or more off buying your first home, it could be worth opening one to take advantage of what is, essentially, free cash. If you suspect you might be ready to buy sooner, you’re better off leaving your deposit outside of a lifetime ISA.

2. Automate your deposit savings

Life is busy, which means transferring money into your savings account isn’t always at the top of the to-do list. Setting up a standing order from your current to your dedicated deposit savings account (or Lifetime ISA, if you have one) is a great way to automate the process.

Scheduling this money to go out immediately after you get paid is a good idea. This means you’ll make adding to your deposit pot a priority over your non-essential spending, rather than just saving whatever happens to be left in your account at the end of each month. 

3. Try the 50-30-20 rule

How much you can save towards your deposit is highly personal and depends on your individual income, outgoings and circumstances, such as whether you have any debts. But if you’re looking for a bit of guidance, a good financial rule to follow is the 50-30-20 rule of dividing your income:

• 50% for needs: These are your essential expenses and the things you can’t do without, such as rent, food shopping, transport and bills.
• 30% for wants: These are the things that bring you joy, such as going out for food, socialising, trips away, hobbies and clothes shopping.
• 20% for savings: This is money that gets paid directly into your savings account.

However, if you’re really looking to accelerate the time needed to save for a deposit, consider adjusting the percentages to suit. For example, you might choose to put 30% towards savings and leave only 20% for wants, temporarily, to speed up the process. 

Don’t worry if you need to adapt it at any point in the year. Saving does need to be sustainable, so have flexibility with yourself. For example, in January, you might be able to put 30 or 35% towards savings, as it’s generally a quieter month. But in June or July, if you’re going away, this might need to switch to 15 or 20%. 

4. Reduce the cost of your rent, if you can

While cutting back on your rental costs isn’t the easiest of options, it’s definitely doable – especially if you’re keen to get on the ladder quickly.

If you currently rent your own property, for example, could you consider getting a housemate, or moving into a house share temporarily? According to data by Home.co.uk, the average rent for a flat in London is £4,365 per month, while the average rent for a room is just £1,087. This means you could amass significant savings by sharing – even if only for a few months – while you build up your deposit.

Another option is moving back in with your parents. This won’t be possible (or doable) for everyone, but if it’s something you can make work, the savings could be huge. Of course, you could still agree to pay them an amount of rent to cover bills and expenses.

5. Cut your bills where possible

Setting aside some time to go through your broadband, insurance and phone bills could cut a decent chunk of money off your monthly outgoings, which can instantly be put in your deposit pot.

Use comparison sites to see if you could reduce your monthly or annual outgoings for broadband, TV and mobile services, as well as insurance payments, especially if you’re out of contract or it’s due for renewal.

If your phone contract is due to end this year, consider keeping your phone and opting for a cheaper, SIM-only plan. This alone could save you hundreds.

Look at your subscriptions. Netflix, Spotify, Apple TV and Amazon Prime might seem like nothing individually, but can easily add a significant chunk to your monthly outgoings altogether. Are there any you could live without?

Energy bills fell this summer but are still at a historical high and are set to go higher from October, so the best way to save is to be savvy about your usage. Try to only heat the rooms you use, programme your heating to avoid wastage and consider turning down the flow temperature of your boiler. It’s also worth keeping an eye out for cheaper fixed-rate deals.

6. Review non-essential spending

Reviewing your non-essential spending is an instant way to save money that can be used towards your deposit. Sit down, open your banking app and write down what you’ve spent (aside from bills) in the previous month and why. You could split these into categories, such as eating out, takeaways, gifts for friends and family and clothes shopping. Once you’ve got the figures in front of you, it should be easy to see where you might be able to cut back. This way, you can adjust your spending and direct money towards your deposit fund instead.

7. Consider a side hustle

The cost of living crisis has impacted all of us, making it much harder to save. For this reason, earning money to supplement your income is never a bad idea, but it can be especially useful if you're aiming to get on the property ladder as soon as possible.

You could look at your side hustle as a direct means to save – i.e, anything you earn from it, whether that's £20 or £200, goes directly into your deposit fund. What you choose to do as a side hustle will depend on your unique skills and circumstances.

For example, if you’re a good writer, you could try out freelance blog writing via sites like PeoplePerHour. If you’ve grown up with younger siblings and feel confident looking after children, you could start babysitting a couple of nights per week. If you’re an animal lover, you could offer dog walking services. Or if you’re a maths graduate, you could start tutoring GCSE or A-Level students.

But there are even easier options. You could declutter your home and start selling your unwanted items. From clothes to tech, this can add up to a decent sum. Or, you could take online surveys for money via sites like YouGov and SwagBucks, which can literally be completed whilst watching TV in the evenings. It can be useful to set up a separate email for these sites, so that your everyday inbox doesn’t overflow with survey offers.

Be aware that if you make more than £1,000 from side hustle earnings, you’ll need to declare your earnings to HMRC through self-assessment.”