The report found that 44 per cent of first-time buyers delayed their house purchase plans in 2020 due to uncertainty in the property market, personal finance worries, concerns around safety of house viewings and job security.
Santander’s Life After Lockdown report analysed the views of 12,000 UK adults between January and March this year and combined their views with industry data to examine how the pandemic impacted attitudes to homebuying.
First-time buyers were more likely than any other group to cite personal finances as their reason for delays, with 47 per cent claiming it was the reason their plans did not go ahead compared to a third of other buyers.
The plight of first-time buyers was worsened by a fall in lending to those with smaller deposits as LTVs shrank during the pandemic.
Figures from the Financial Conduct Authority showed that the share of advances with loan-to-value (LTV) ratios in excess of 90 per cent fell to 1.2 percent in the fourth quarter, which is the lowest level since 2007.
Other factors cited were incomes not keeping pace with rising rent and house prices, which could limit the ability of first-time buyers to save a deposit.
Over the past five years according to the Office for National Statistics, average rent has risen by 10 per cent, whilst income has only risen by 7 per cent.
House prices increased by 8.5 per cent in the second half of last year, now standing at a record high of £252,000 which is the highest seen since 2014.
Only 17 per cent of first-time buyers were able to save a larger deposit during the pandemic, compared to 61 per cent of second and holiday home buyers.
The lender added that the inability to save a larger deposit could be due to first-time buyers working in areas that were more impacted by the pandemic such as leisure, retail and hospitality.
First-time buyers were also the least likely group to bring forward their plans to buy at just 16 per cent, compared to 28 per cent of second home buyers and 24 per cent of buy-to-let investors.
The report also found that 54 per cent thought that the Bank of Mum and Dad, where parents help with the deposit for a house purchase, would be less able to offer support as they prioritised their own finances.
However, the report presented a mixed picture as 57 per cent thought that first-time buyers would become more dependent on the bank of Mum and Dad due to the pandemic.
Its thought that those parents who had not experienced as much financial hardship could be able to offer more money as they were able to save more during various lockdowns.
In order to close the gap for first-time buyers, co-ordinated action was needed by the industry, government and policy makers.
It noted that the government should consider amending stamp duty relief when it returns in October and stamp duty free thresholds should be matched to regional house prices.
Santander also recommended examining affordability requirements and launching a loan scheme for deposits for key workers. Converting commercial building to create extra housing was also mooted.
