Second steppers need £60K extra to buy next home

October 17, 2014 at 10:27 AM Leave a comment

People taking their second step on the housing ladder need to find an extra £60,000 to fund their move, research showed today.

First time buyer

Soaring property values have left many so-called second steppers struggling to trade up to a bigger home, according to Lloyds Bank.

The group estimates that these buyers need to find an additional £58,400 to fund the purchase of their next home, around double the average deposit put down by first time buyers.

The gap between the typical sale price of second steppers’ current property and the home they would like to buy is now around £15,000 bigger than it was in 2013 and £18,000 more than in 2012.

Just over half of people who are currently living in their first home said they had wanted to trade up the property ladder in the past 12 months but been unable to do so.

Although the plight of first time buyers gets a lot of attention, second steppers are equally important to the health of the housing ladder, as they are currently living in the homes that first time buyers need to purchase.

But despite the growing financial burden of buying their next home, confidence among second steppers is improving.

Around 43 per cent of people said rising house prices had had a positive impact on their situation, and 40 per cent think it will be easier to sell their property now than it was last year.

Only a quarter of people who would like to buy their next home see economic uncertainty as a challenge, down 10 percentage points from 2013, while just 14 per cent say negative equity is a problem, down 11 percentage points from a year ago.

But the fees and charges associated with buying a new home are still seen as the biggest barrier to trading up the ladder, with these cited as a challenge by 46 per cent of second steppers.

On average, people think the value of their first home has increased by 20 per cent since they bought it, typically around four years ago.

As a result, the number of people worried about the size of the deposit they will need to find has fallen from 50 per cent in 2013 to 37 per cent now.

Marc Page, mortgages director at Lloyds Bank, said: “The jump to the next step is growing quickly for second steppers, with the gap to the second home now being almost £60,000 nationally.

“However, as house prices are rising and barriers to the next step are reducing, confidence about selling the first home and being able to move up is increasing.

“For most regions of the country this is helping people make that jump across the gap to the next rung on the ladder.”

There are significant regional variations in the amount people buying their second home need to raise.

Trading up the property ladder is easiest in the West Midlands, where the price difference between a first and second home is only £21,000.

But at the other end of the scale, people in East Anglia need to find an additional £80,800 to make the jump.

Entry filed under: Advice. Tags: , , , .

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