First-time buyers now need to build an average £23,000 deposit to take the difficult initial step on to the property ladder, fresh research shows.

Prospective buyers must save 10 per cent of their pay packet each month for six years, on average, into order to snap up a starter home according to Nationwide Building Society.

There is, however, a huge regional chasm with buyers in some areas needing to save for five years more than those in other locations.

In inner London, typical first-time homeowners must build a £44,800 pot for their deposit, which would take nine years for an average worker if they were able to save 10 per cent of their pay each month.

Other areas with high deposits include outer London at £32,800, the outer south east at £26,300 and the south west where 10 per cent deposits are £24,700.

However, in the north east the deposit needed is just £13,100 due to lower house prices, which would take just four years to save, the mutual said.

Other areas with low deposits include Scotland (£13,900), Yorkshire and the Humber (£15,400), and Wales (£17,300).

However, house prices have remained flat in many areas over the last year which offers an opportunity for first-time buyers’ deposit savings to catch up, Nationwide said. 

While average property prices reached £270,000 in October - the latest available data from the Office for National Statistics - they climbed just 1.7 per cent year-on-year. 

Andrew Harvey, Nationwide’s senior economist, said: ‘With price growth well below the rate of earnings growth and a steady decline in mortgage rates, affordability constraints have eased somewhat over the past year, helping to underpin buyer demand.’

Stubborn mortgage rates have also begun to drop from highs seen just a few years ago, as the possibility of further cuts to the Bank of England base rate loom.

It means first-time buyer activity levels last year were 20 per cent higher than in 2024. 

And the share of high loan-to-value lending – where a deposit is 15 per cent of less of the property price - was at its highest level for more than a decade, suggesting a high proportion of buyers were those snapping up a starter home.

A handful of lenders changed their affordability criteria last year to allow first-time buyers to borrow more money for their home loan.

This means reams of young buyers were able to put up a smaller deposit.

The number of those snapping up their first home is only tipped to climb this year as property price tags flatline in many areas, making it easier for some buyers to take their first step on the property ladder.

Young buyers boost the housing market 

Certainty over housing policy and improved affordability criteria are luring more young buyers to the market, according to separate figures from Barclays.

One in three 18- to 34-year-olds are planning on buying a new or first home this year, more than double the national average of 16 per cent.

Generation Z savers - adults aged between 18 and 28 - have already funneled some £19,442 into their deposit fund on average, the bank said, with plans to add almost £9,000 to the pot this year.

And confidence in the housing market has soared among the age group from 33 per cent in January 2025, to 40 per cent by the end of the year.

This optimism is driven by a slowdown in house price growth. In December, some 22 per cent of young buyers used a deposit of less than £20,000 – up from 13 per cent at the same time in the previous year.

It comes as mortgages with smaller deposits are becoming more popular. 

Some 44 per cent of first-time buyers opted for a mortgage with a 10 or 15 per cent deposit in December to take an easier step onto the first rung of the property ladder, Barclays says.

Mortgage rates have been improving for first time buyers, which means the monthly payments on low-deposit loans - typically the highest on the market - are becoming more affordable. 

In the last few days, a handful of lenders have launched 10 per cent deposit deals with rates as low as 3.96 per cent.

These are on a two-year fixed rate, with five-year fixes remaining more expensive.

Falling mortgage rates make monthly payments more affordable, which could help more people on to the ladder.

The best-buy rate is 3.96 per cent with Lloyds Bank, based on a 10 per cent deposit and a two-year fix - though they will need to have a Club Lloyds account with the bank to get it.

It marks a significant fall from the beginning of December 2025, when the cheapest rate available was 4.16 per cent. Banks have gradually reduced their rates since the Bank of England cut the base rate on 18 December.

However, affordability pressures still remain as house prices climb and sticky inflation – currently sitting at 3.2 per cent – eats into monthly household budgets.

Regional chasm remains

Despite affordability improving for those buying their starter home, there is still a huge chasm in affordability across the country.

All areas except one – Northern Ireland – have seen an improvement over the past year in first-time buyer mortgage payments as a share of take-home pay.

Nationwide's Harvey explains: ‘Northern Ireland saw a deterioration in affordability due to the strong house price growth experienced over the past year. 

'While mortgage payments as a share of take-home pay are a little lower than the UK average, they are now noticeably above the long-run average in the region.’

London performed well in this metric as struggling house prices combined with solid earnings growth mean mortgage payments take up a lower proportion of a pay packet.

He says: ‘Affordability pressures remain pronounced in the south of England, whilst in the north, Yorkshire & The Humber and Scotland, mortgage payments as a share of take-home pay are actually slightly below their long-run average.’

Nathan Emerson, chief executive of estate agency group Propertymark, says: ‘The fact that a typical first-time buyer still needs close to six years to save for a 10 per cent deposit shows just how significant the deposit barrier remains, especially in London and the South of England.

‘Regional and occupational disparities continue to shape who can realistically buy a home. 

'Too many buyers are still reliant on financial help from family and friends, and this risks entrenching inequalities between those with access to support and those without.’