16 April 2023 , 07:30
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Bristol has been named the UK’s Lifetime ISA hotspot - the most popular region among first-time buyers who have used the savings and government bonus scheme to buy a property.
Using customer LISA house purchase withdrawal data, Moneybox revealed the southwest city has come out on top three years in a row with a 13% increase in the number of first-time buyers choosing there in the last year.
The average property price paid by these first-time buyers in Bristol was £314,307, and each withdrew £13,159 on average - including a 25% government bonus - from their Lifetime ISA to put towards their deposit.
The second most popular region was Manchester, followed by Sheffield, Birmingham and Edinburgh.
People are beginning to open LISA accounts at earlier ages, now opening at 26 (Getty Images)The Lifetime ISA was launched by the government in 2017 to encourage younger people to get into the habit of saving towards their first home or for a more comfortable retirement.
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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.
So far, more than 118,000 homes been bought with a LISA, with most recent government data showed a fivefold increase in the number of first-time buyers using the product - from 154,000 in 2017/18 - to 553,000 in 2020/21.
While more recent government data is not yet available, Moneybox data shows consumer demand is growing rapidly, having seen a 21% increase in the number LISA accounts opened year-on-year.
Manchester, which took second spot in the hotspots list, saw a 24% increase in LISA house purchases over the last year, with an average property purchase price of £256,305.
Sheffield jumped five places from the previous year into third place with a 38% increase and an average property price of £215,285.
Birmingham and Edinburgh - in fourth and fifth place - saw modest year-on-year increases in the number of LISA homebuyers last year, with a 2% and 6% increase respectively.
But South East London entered the top 10 this year at eighth place, with a 41% increase in LISA-enabled first-time buyers choosing to buy there.
Bristol is the UK "hotspot" for first-time buyers (Moneybox/SWNS)Despite widely reported soaring property prices across London in recent years, the average property price paid by Moneybox LISA homebuyers in the region was £367,524.
And although Glasgow dropped down to sixth place this year, the region has still seen a notable 10% increase in popularity year-on-year.
Reading, Belfast and Chelmsford completed the top 10.
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The Moneybox data also revealed that people are now starting to save with Lifetime ISA earlier in life, with customers now opening a LISA at the age of 26, down from 29 in 2017/2018.
Cecilia Mourain, MD, Moneybox Homebuying, said: “There can be no doubt just how invaluable the Lifetime ISA has been, encouraging young savers to plan for their future and build positive saving habits early in life, resulting in many thousands being able to buy their first home far sooner than would otherwise have been possible.
“With rising costs of living continuing to put a strain on our day-to-day finances, if you do hope to own your own home someday, the opportunity to gain a 25% cash bonus from the Government to boost your hard-earned deposit savings should not be taken for granted.
“You could gain as much as £32,000 in free cash from the government throughout your lifetime if you use the product as intended and while the Lifetime ISA may not be suitable for everyone who is eligible for it, we believe far more could be benefiting from the fantastic government bonus than are currently doing so.”
TOP LISA-AIDED PROPERTY PURCHASES (With average value of LISA house purchase withdrawals / average house purchase value):
- Bristol - £13,159 / £314,307
- Manchester - £12,976 / £256,305
- Sheffield - £11,385 / £215,285
- Birmingham - £12,278 / £255,064
- Edinburgh - £13,000 / £358,399
- Glasgow - £11,829 / £204,740
- Belfast - £11,500 / £194,602
- SE London - £14,187 / £367,524
- Reading - £12,876 / £321,569
- Chelmsford - £13,229 / £343,928