Summary of this article
34 per cent of Gen Z plans home purchase
Smaller deposits and higher LTV loans gain ground
Remortgaging pressures expected as fixed-rate deals end
Young people are increasingly confident about entering the property market in 2026 because of smaller deposits and more extensive reliance on high loan-to-value mortgages, according to Barclays Property Insights.
The research shows that 34 per cent of Gen Z adults are looking to purchase a new home or their first home in 2026, a number significantly higher than the year-on-year average of 16 per cent. The optimism among 18- to 34-year-olds continued to increase throughout 2025, reaching 40 per cent in December, up from 33 per cent in January.
The issue of affordability continues to rank high. 64 per cent of young buyers feel that high property prices are a significant impediment, while 61 per cent feel that the effect of mortgage rates is more influential in affecting affordability compared to property prices.
Smaller Deposits and Higher LTV Ratio
According to Barclays, traditional obstacles to home ownership appear to be falling away. In December 2025, the proportion of first-time buyers to exchange on a property with a deposit of 20,000 pounds or less rose to 22 per cent, an eight-point increase from a year ago when it was 13 per cent.
The average first-time homebuyer deposit decreased by 14 per cent compared with the previous year. However, the demand for high-Loan-To-Value (LTV) borrowing kept rising, as 44 per cent of first-time buyers selected 85-90 per cent high-LTV products in December, compared with 41 per cent in December of the previous year.
However, this development is expected to indicate an increasing trend in smaller deposits and more borrowing, facilitated by mortgages that help first-time homebuyers gain access to the market.
Spending Habits of Gen Z Customers
Despite pressures on affordability, a significant number of Gen Z homebuyers have started saving for down payments. Every 6 out of 10 Gen Z homebuyers who plan on purchasing a home in 2026 say they've already started saving for a down payment and have set aside what they feel is a significant amount for that purpose.
On average, Gen Z savers have saved around 19,442 pounds for deposits without including any contributions or inheritances. This is lower than the mean of 25,760 pounds for all potential new buyers. Gen Z would increase its contributions by around 8,998 pounds in 2026, while the national mean is at 11,023 pounds.
Family support remains a factor, although the signs are changing. The Bank of Mum and Dad (pun for financial assistance received from parents) assisted 34 per cent of the most recent Gen Z home-buying clients. However, just 43 per cent of Gen Z adults feel that buying with money or inheriting it is a crucial aspect of buying a home, down from 63 per cent at the outset of 2025.
Demand Concentrates on Lower-Priced Homes
Changes to stamp duty thresholds in April 2025 have influenced buyer behaviour, particularly among first-time buyers. Properties below 300,000 pounds contributed 72 per cent of the first-time purchases in May 2025 compared to 60 per cent in April.
This trend remained consistent throughout the year. In December 2025, around 65 per cent of purchases made by first-time buyers were of properties worth below 300,000 pounds. On average, almost seven out of 10 first-time buyers since the change in the threshold had made their purchases within this band.
Remortgaging Pressures Expected in 2026
The report also points to significant refinancing activity ahead. Just over a fifth of mortgage holders, or 22 per cent, expect to remortgage in 2026 as five-year fixed-rate deals taken out in 2021 come to an end.
Among those planning to remortgage, about 64 per cent expect to see their bill increase. To handle this problem, 39 per cent will reduce their spending on small indulgences, and 28 per cent will review their budget to reduce their bills.
Beyond remortgaging, housing remains a central financial priority. Roughly 34 per cent of homeowners are considering making changes related to their property in 2026, and 51 per cent are currently setting aside funds for their property, such as upgrades, an emergency fund, or energy efficiency measures.
Confidence Improves, but Pressures Remain
Although the perception regarding house prices and deposit rates has eased in 2025, owning a house is the most mentioned obstacle for Gen Zs. The cost of a deposit was cited as an issue by 39 per cent of the respondents, and property prices by 41 per cent.
The younger consumers are gaining confidence, boosted by the shift in borrowing habits and reduced deposit conditions. Meanwhile, the high prices and mortgage rates, and the prospect of rising repayments continue to shape housing decisions as households look ahead to 2026.
