Bristol, Manchester, and Birmingham have topped a list of UK cities with the highest number of first-time buyers – who are using a Lifetime ISA to put towards a property deposit.
Bristol has held on to the top spot on the Lifetime ISA (LISA) hotspot list for the fourth year running, with residents in the south-west city saving an average of 14% more in the last 12 months into the deposit savings account, compared to the previous year.
Between March 2023 and March 2024, the average LISA withdrawal amount for a house purchase in Bristol was £14,372, with buyers typically paying £302,939 to get onto the property ladder – a drop of 1.75%, year-on-year.
Meanwhile, Manchester also saw a 14% rise in the number of people using their LISA towards a house deposit – with an average withdrawal of £13,555 towards their first home, and property prices in the city up by 3.65% year-on-year, to £260,989.
Birmingham, Edinburgh, and Glasgow rounded out the top five cities with the most residents using a LISA – with respective withdrawals of £13,307, £13,013, and £12,485.
The figures were revealed by Lifetime ISA provider, Moneybox, whose head of personal finance, Brian Byrnes, said: “Over the last four years, Bristol, Manchester, and Birmingham have consistently topped the table as the most popular places for Moneybox LISA-enabled first-time buyers to put down roots.
“With excellent transport links, a vast and diverse employment market, and a vibrant social scene, these areas are increasingly drawing young buyers, who may have previously chosen to move closer to the capital.
“Bristol, for example, with highly-respected universities feeding into its burgeoning tech sector, is becoming an increasingly attractive place for young people to live and work. Bristol was also recently named as one of the top European tech hubs, attracting many young professionals to relocate.
“Manchester and Birmingham still offer great value for first-time buyers, and the investment in the Northern Powerhouse has created more job opportunities and resulted in better infrastructure – which has also added to the appeal of places like Leeds and Sheffield.”
The Lifetime ISA was launched by the government in 2017 to encourage young people to get into the habit of saving towards their first home, or for a more comfortable retirement, earlier in life.
Those aged 18-39 can pay in up to £4,000 each tax year, and get a 25% government bonus on their savings – up to £1,000 extra for free each tax year.
Since its launch, more than 170,000 first homes have been bought using the scheme – with Moneybox alone seeing a 38% increase in LISA accounts opened over the last 12 months.
Brian Byrnes added: “Despite ongoing cost-of-living pressures in recent years, aspiring first-time buyers are showing impressive commitment and dedication towards achieving their goal of buying a home of their own.
“Those who have bought in the last year even managed to save 10% more towards their deposit than previous cohorts.
“And despite London being widely regarded as the least affordable city, many were able to make their dream a reality in the city – with South East London featuring in the top 10 most popular regions for LISA-enabled homebuyers, two years in a row.
“Affordability considerations will no doubt continue to drive first-time buyer behaviour in the coming years, as persistent cost-of-living challenges continue to put pressure on finances up and down the country.
“Perhaps for this reason, the Lifetime ISA has never been so popular, with hundreds of thousands of young savers across the UK having sought the help of the Moneybox Lifetime ISA to build a suitable deposit in the last year alone.”
London buyers paid an average £356,713 of for their first home – which is down 2% year-on-year – and made a house purchase withdrawal of £15,514 from their LISA, to go towards their deposit.
Unsurprisingly, London buyers paid 39% more for their first homes than buyers across the rest of the FTB LISA Hotspots – and 18% more than those in Bristol. Belfast home buyers paid the least to get their foot on the property ladder – an average of £188,314.
Under current Lifetime ISA product rules, savers can only buy a property that costs £450,000 or less, or they will incur a 25% government penalty fee.
And while the nationwide average property price paid by Moneybox LISA savers last year was £257,000, if the price cap had risen in line with house price inflation, it would currently stand at £607,000.
This has led to several campaigns calling on the government to increase the cap to ensure the product remains fit for purpose – particularly for those living in some of the most expensive parts of the country.
Brian Byrnes added: “The Lifetime ISA has been an absolute lifeline for a whole generation of young savers, who have been able to buy their first home far sooner than would otherwise have been possible, thanks to the fantastic 25% government bonus the savings scheme offers.
“While we were disappointed that the Chancellor did not take a few simple measures to future-proof this fantastic product in the recent Spring mirror.co.uk/all-about/the-budget>Budget, we are encouraged that it remains on his agenda.
“In many ways, it has never been more challenging to be a first-time buyer, and raising a deposit remains one of the biggest hurdles many face on that journey.
“We are committed to doing all we can to ensure the product is future-proofed, so that it continues to meet the needs of the next generation of homeowners, and provide a much-needed boost to aspiring first-time buyers across the country.”
TOP 10 LISA HOTSPOTS IN THE UK (From 01/03/2023-01/03/2024):
1. BRISTOL
- Average property price paid: £302,939
- Average LISA house purchase withdrawal amount: £14,372
2. MANCHESTER
- Average property price paid: £260,989
- Average LISA house purchase withdrawal amount: £13,555
3. BIRMINGHAM
- Average property price paid: £254,985
- Average LISA house purchase withdrawal amount: £13,307
4. EDINBURGH
- Average property price paid: £244,455
- Average LISA house purchase withdrawal amount: £13,013
5. GLASGOW
- Average property price paid: £200,421
- Average LISA house purchase withdrawal amount: £12,485
6. BELFAST
- Average property price paid: £188,314
- Average LISA house purchase withdrawal amount: £12,018
7. SHEFFIELD
- Average property price paid: £210,114
- Average LISA house purchase withdrawal amount: £12,336
8. READING
- Average property price paid: £319,799
- Average LISA house purchase withdrawal amount: £14,359
9. LEEDS
- Average property price paid: £244,871
- Average LISA house purchase withdrawal amount: £13,046
10. SOUTH EAST LONDON
- Average property price paid: £344,040
- Average LISA house purchase withdrawal amount: £15,162
