Home owners trying to take their second step on the property ladder face a typical price gap of more than £135,000 to make the leap, a report has found
Home owners trying to take their second step on the property ladder face a typical price gap of more than £135,000 to make the leap, a report has found.
The Lloyds Bank Second Stepper report found people who have previously been first-time buyers who are now looking to trade up typically live in a home valued at about £211,296.
But, typically, the type of property they would like to move to – a detached home – will cost around £347,281 – a difference of £135,985.
However, Lloyds also calculates that second steppers have an average equity level of £85,877 to inject into their next property, making it easier to make the jump.
This equity is made up of the deposit they put down on their existing home, the mortgage repayments made since buying it and the rising value of their home while second steppers have been living there.
The calculation assumes that homeowners stay in their first home for just under four years on average before taking their second step on the property ladder.
More than a third (35%) of second steppers think it will be harder to sell their existing property this year than it would have been a year ago.
More than a quarter (29%) are worried about the uncertain economic climate, while the deposit size remains a key challenge for 30% and about one in four (26%) are struggling to find the right property to move to, the report found.
Nearly two-fifths (39%) are concerned about further interest rate hikes following last year’s Bank of England base rate rise.
Lloyds Bank mortgages director, Andrew Mason said the interest rate rise late last year marks the first increase first-time sellers have seen since becoming homeowners and even though it was small it has caused some concern.
A driveway or off-road parking, a garden and a kitchen/diner were found to be common “must-haves” for second steppers, many of whom will be moving to make more space for growing families.
Housing Minister Kit Malthouse MP said they are taking steps to make the housing market work for everyone, including second steppers. He said that for too long, enough properties have not been built and they have set out ambitious plans to deliver 300,000 homes a year by the mid-2020s.
He said that through planning reform and £44 billion of targeted financial support, they are working to build more, better, faster.