The incoming Labour government has a social mandate to support the next generation of homeowners in the UK, says financial PropTech provider Moneybox. 

The saving and investing app’s latest research found two-thirds (66%) of aspiring first-time buyers (FTBs) have reevaluated their homeownership goals in the past six months, with half (51%) now planning to buy at a later date. 

In its latest biannual study of 1,000 aspiring home-owners across the UK, Moneybox found that a third (34%) think Labour is the party best placed to support FTBs as they navigate some of the most challenging home-buying conditions in 70 years. 

More than a quarter (28%) of respondents admitted they don’t trust any political party to help them purchase a home of their own, and only 8% believe the Conservatives have their back. 

The Liberal Democrats and Green Party saw only 4% and 3% FTB support respectively.

According to the study, the average FTB has been saving for 2 years 10 months and expects to be able to buy their first home in 4 years and 6 months, an increase from 4 years and 2 months in 2023. 

Despite a generally improving economic environment, FTB confidence has wavered in the face of persistent cost of living challenges and market volatility. 41% now admit they are feeling pessimistic about their chances of becoming a homeowner, increasing from 37% a year ago and 21% in 2022.

Over half (57%) said this is because the cost of living has eroded their disposable income, making it harder to save a deposit – a sentiment that has remained relatively constant for two years. 51% are disheartened because of rising house prices and 37% are concerned that high interest rates have made mortgages more unaffordable.

Others have maintained a more positive outlook, with 35% reporting they continue to feel optimistic about their home buying plans.  One in five (21%) are confident they will get on the housing ladder despite the ever-changing environment.

The most notable drivers of their optimism include the belief that interest rates will start to come down this summer (26%), the cost of living crisis is slowing down, and anticipation of support measures an incoming government may introduce following the general election (18%).

However, unavoidable financial pressures have meant that FTBs are now saving 18% less towards their first home deposit than a year ago, down from £344 to £286 a month, and a quarter (26%) have had to dip into their hard-earned deposit savings to cover unexpected expenses.

Despite these challenges, owning a home is more important than ever for 79% of FTBs. Two-thirds (62%) believe being a homeowner is vital to achieving financial security. 55% are primarily motivated to buy to escape the increasingly expensive rental market, up from 48% in 2023.

To make their dream a reality, cash savings have remained the most popular way FTBs save for a deposit over the years, typically using a combination of Easy Access Savings accounts (42%), Cash ISAs (29%), and the Lifetime ISA (22%).

Affordable homeownership schemes, designed to help FTBs onto the property ladder have all become less popular in the last six months. 

The number considering the First Homes Scheme or Rent-to-buy / Rent-to-own has fallen over the year from 31% to 22%, and 26% to 20% respectively. Only 9% said they were considering the Mortgage Guarantee Scheme – a measure the Labour Party have pledged to make permanent if they come into power on July 4th.

The Lifetime ISA (LISA) by comparison has already been a lifeline for a whole generation of FTBs in the UK.  According to the latest 2022-23 HMRC data, over 170,000 FTBs have been supported to buy their first homes far sooner than would have otherwise been possible thanks to the fantastic 25% government bonus on deposit savings up to £4,000 each tax year. 

And yet, despite its growing popularity – Moneybox has seen a 42% increase in the number of new customers opening a Lifetime ISA over the last twelve months versus the previous twelve months – the product rules have not been reviewed by the Treasury since the LISA was first introduced in 2017.

With one in five (22%) FTBs now saving for a home using the LISA, the Proptech firm says there is a clear opportunity for the new government to futureproof the LISA so that more people can save more money towards their deposit.