This city holds the title of ‘the UK’S Lifetime ISA hotspot'

Customer house purchase withdrawal data from Lifetime ISA (LISA) provider Moneybox revealed more bought their first home in the south west city last year with the help of the savings scheme than anywhere else in the country - for the fourth year in a row.

LISA-enabled home buyers in Bristol paid an average of £302,939 for their property, which is down 1.75 per cent year-on-year.

They had each saved an average of £14,372 in their LISA to put towards their deposit, a 14 per cent increase compared to the previous year. The second most popular city was Manchester, which saw a 14 per cent increase in LISA house purchases.

Those in the north west city paid an average of £260,989 for their new home, up 3.65 per cent year on year, making a house purchase withdrawal of £13,555 from LISAs - 14 per cent more than the year before. While the scheme's popularity in Birmingham soared by 23 per cent in the last year.

First-time buyers settling in the city last year paid £254,985 for their first home on average, and cashed out £13,307 towards their deposit - up 12 per cent year-on-year. Edinburgh and Glasgow completed the top five first-time buyer LISA UK Hotspots.

Brian Byrnes, head of personal finance at Moneybox 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.”

Building a suitable deposit

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 per cent 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 per cent 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 per cent 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 two per cent 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 per cent more for their first homes than buyers across the rest of the FTB LISA Hotspots - and 18 per cent 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 per cent government penalty fee.

While nationwide, the 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 per cent 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 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)

Bristol

Average property price paid: £302,939 

Average LISA house purchase withdrawal amount: £14,372

Manchester

Average property price paid: £260,989

Average LISA house purchase withdrawal amount: £13,555

Birmingham

Average property price paid: £254,985

Average LISA house purchase withdrawal amount: £13,307

Edinburgh

Average property price paid: £244,455

Average LISA house purchase withdrawal amount: £13,013

Glasgow

Average property price paid: £200,421

Average LISA house purchase withdrawal amount: £12,485

Belfast

Average property price paid: £188,314

Average LISA house purchase withdrawal amount: £12,018

Sheffield

Average property price paid: £210,114

Average LISA house purchase withdrawal amount: £12,336

Reading

Average property price paid: £319,799

Average LISA house purchase withdrawal amount: £14,359

Average property price paid: £244,871

Average LISA house purchase withdrawal amount: £13,046

Average property price paid: £344,040

Average LISA house purchase withdrawal amount: £15,162