"Second steppers are telling us that finding the right property can be tough, and because of that, they’re delaying their move"
The findings show that the gap between the sale price of their current property and the cost of their ideal home – typically a detached property – is £126,000. However, the average equity level of £105,068 from the sale of their first home can help to reduce this gap by 83%, meaning that Second Steppers need only add an extra £21,005 to their existing mortgage.
Today’s typical second steppers bought their first property in 2012, when the average price of a first-time home was £140,004. Based on the latest house price figures, selling their home now for the average first-time buyer house price of £205,723 would provide them with an average equity of £105,068 – around two-thirds of which has been boosted by house price growth over the last four years, with the rest coming from the initial deposit and mortgage repayment.
This average equity of £105,068, which has more than quadrupled from just £23,643 four years ago, is equivalent to roughly a third (32%) of the average price of a typical three-bedroomed detached second stepper home (£331,796).
Other factors have also improved for second steppers, including record low mortgage rates and better home affordability. Higher levels of equity built up in the past four years have contributed to home affordability for first-time sellers improving from 7.2 times UK gross annual average earnings in 2012 compared with 6.6 in 2016.
45% feel that their equity position has improved over the last year, however one in three ‘Second-Time Buyers’ say it will be more difficult to sell their home this year.
Around one in three (34%) are also considering staying put and improving their homes rather than moving.
The report reveals that over a quarter (26%) are worried about the uncertain economic climate, deposit size remains a key challenge (29%) and a third (32%) of these new and growing families are struggling to find the right property.
Andrew Mason, Lloyds Bank Mortgage Director, said: “Second steppers are yesterday’s first-time buyers and the conditions to help them climb to the next rung on the property ladder are better than they’ve been for over four years. Despite this, many still feel that things are tough out there and that it’s getting more difficult to sell your first home and move up the ladder.
Second steppers are telling us that finding the right property can be tough, and because of that, they’re delaying their move. However, if too many second steppers hold out for a long time for their ‘dream home’ this could reduce the availability of homes for first-time buyers and slow the market.”
