A new report by research consultancy Public First, supported by the Home Builders Federation (HBF), has outlined a potential solution to the UK’s housing crisis by focusing on helping more young people afford their first home.

Published today, the Saving the British Dream: Investing in First Time Buyers for Economic Renewal report highlights the urgent need for targeted government action to support first-time buyers. It notes that weak housing demand among this group is threatening both housebuilding rates and broader economic growth. According to Public First’s First Time Buyer Index, just 10.4% of young adults are financially in a position to buy their first home, with only 350,000 households able to meet the income and savings requirements for homeownership.

The report suggests that introducing a new equity loan scheme, part-funded by the housing industry, could significantly widen access to homeownership for young people. The scheme would lower deposit requirements and affordability barriers for new-build homes, providing crucial support to those who cannot rely on family wealth to save for a deposit.

Public First’s economic modelling demonstrates that such a scheme could bring homeownership within reach for an additional 490,000 young people, increasing the potential first-time buyer market by over 80%. It could also stimulate the construction of at least 19,700 new homes annually, leading to 98,500 additional homes over five years, marking an 8% increase in housing supply.

Moreover, the report predicts that introducing this policy could generate £5.7 billion in extra economic activity every year, contributing £28.5 billion over five years, thereby boosting the Government’s economic growth targets. The research highlights that this initiative would benefit those who are not high earners or cannot rely on parental wealth to fund a deposit, addressing a key barrier to homeownership.

Additionally, recent HBF's report, Broken Ladder: Stairway to Never, found that only 30% of earners are currently able to afford a home, emphasised the scale of the challenge first-time buyers face in entering the housing market.

The report’s recommendations align with HBF’s call for Government to introduce a scheme to support buyers, it being the first time in decades that there is no such scheme in place. The Help to Buy scheme, which was withdrawn in early 2023, offered interest-free loans for the first five years, allowing buyers to secure a property with deposits as low as 5%.

Public support for the proposal is strong, with 76% of the public acknowledging that homeownership has become an unrealistic goal for younger generations, and 69% supporting a scheme that reduces the deposit requirement to 5% for new-build homes. The findings make a compelling case for the Government to implement policies that make homeownership more accessible to young people, easing pressures on both the housing market and the economy while helping to address generational inequalities.

Jack Airey, Housing and Infrastructure Director at Public First, said: “Our research finds that without significant wage growth, or a scheme that makes low-deposit mortgages more affordable and accessible, they will be cut off from home ownership for years or decades to come,” he said.

“A shrinking first-time buyer market is ruinous for the government’s housebuilding targets. We find the number of first-time buyers over the next five years could be a third of the normal rate. If fewer people can buy homes, fewer will be built.”

Neil Jefferson, Chief Executive Officer at HBF, said: “Although the government’s planning reforms have been very positive, the home building industry faces major challenges that continue to deter investment in new sites. Without a prospective buyer base, supported by affordable mortgage finance, builders will be hard pressed to make the significant investments necessary to boost housing supply.

“For those not lucky enough to benefit from family wealth, it has never been harder to get on the housing ladder. For many decades, governments of all parties have stepped in to assist first-time buyers, but with this support currently lacking, there are big questions about the health of the housing market and the societal consequences for a generation left behind.

“The industry stands ready to deliver, and the planning changes brought forward by Government in the weeks and months after last year’s election provide a platform for this, but the job is not yet done. Achieving our shared ambitions will turn the tide on generational inequalities and bring huge social and economic benefits.”