Property or pension? 88% of first time buyers sacrifice pensions for property deposits

Soaring house prices are forcing first time buyers to make a tough financial choice: homeownership now or financial security later.

A new survey from Share to Buy reveals that 88% of potential buyers are prioritising saving for a deposit over contributing to a pension, raising concerns about long-term financial stability for younger generations.

The balancing act: Property vs. Pension

Data from Share to Buy’s recent survey of over 2,200 people across England revealed that 77% receive no financial support from family, and many buyers are struggling to gather the funds needed to get on the property ladder.

Single buyers face even steeper challenges – while 57% plan to buy alone, 65% believe it’s unachievable in today’s market.

Despite the urgency to buy, 52% of respondents have savings of £10,000 or less, far short of the average £53,414 deposit needed for a home on the open market.

And it’s not just younger buyers making tough financial trade-offs – over 70% of respondents are over 36, with many approaching retirement age without pension savings.

Jade Turnstill, Head of Brand and Content at Share to Buy said, “While getting onto the property ladder is an important goal, it’s crucial not to neglect your pension savings. A smart approach can help you plan for both homeownership and retirement without compromising your future security.”

“With a variety of support options available, there’s no need to choose between securing your home and building your future. Housing schemes like Shared Ownership, Rent to Buy and Deposit Unlock can help reduce the barriers to homeownership, allowing you to get on the property ladder without draining your savings. At the same time, there are simple ways to stay on track with your pension, ensuring that you’re working toward both short-term and long-term financial goals. You might not have to choose one over the other – planning ahead could mean you can have both!”

As a property portal and educational resource, Share to Buy has shared some expert tips to help you save for your deposit and your long-term financial security. However, if you’re looking for tailored advice or more information, speaking with a specialist financial advisor is highly recommended.

Struggling to save for your first home? Try these tips:

1. Cut the cost of rent: Paying less rent is often the quickest way to free up money for a deposit. Consider moving into a flat-share with friends, or seek out housemates through websites that offer affordable options. If you can find a place near your work, you’ll also save on transport costs, making it easier to build up your deposit.
2. Consider co-living: Explore co-living properties where you rent your own bedroom but share communal spaces with others. It can be cheaper, and bills are often included, which makes budgeting simpler.
3. Get a helping hand from family: If family members are in a position to help, consider moving in with them temporarily. Paying a low rent or covering just utility and food bills can boost your savings rate.
4. Take advantage of Government schemes: Check if you’re eligible for a government scheme like Shared Ownership or the First Homes scheme. These programmes offer financial assistance and reduced entry costs, helping you break into the property market more easily.

Looking to maximise your pension contributions? Try these tips:

1. Maximise employer contributions: Make the most of your employer’s pension contributions. Many employers in the UK offer to match your contributions up to a certain percentage, so it’s important to contribute enough to take full advantage of this benefit. This can significantly boost your pension savings over time.
2. Set up a regular savings plan: Automate regular pension contributions to stay consistent – small, steady payments can grow significantly over time. Also, consider prioritising high-interest savings accounts or a Government-backed Lifetime ISA, which adds a 25% bonus to your savings, up to £1,000 per year.

3. Review your payments regularly: Every time you receive a pay rise, consider increasing your pension contribution. Over time, this can have a significant impact on your retirement savings.
4. Bring your pensions together: If you have multiple pension pots, consider consolidating them into one. This can help you manage your retirement savings more effectively and possibly reduce fees.

“In the current housing market, the pressure to save for a deposit is immense, and many first time buyers are forced to make difficult choices between homeownership today and financial security tomorrow,” says Jade Turnstill. “While it’s crucial to prioritise saving for a deposit if you want to get on the property ladder, it’s equally important not to neglect your pension savings. With the right support and smart planning, you don’t necessarily have to sacrifice one for the other.”

Buying schemes like Shared Ownership can help you secure a home without depleting your savings, while simple strategies like maximising employer contributions and automating pension payments ensure that your financial future remains on track. The key is finding a balance that works for both your short-term and long-term goals, so you can build a secure future without compromising on homeownership.

Share to Buy lists thousands of affordable properties across the country, including those available through Shared Ownership, Rent to Buy, London Living Rent and Discount Market Sale. For more information, visit sharetobuy.com.