Second-time buyers face £41k hurdle to trade up
11 June 2012MeetMyAgent
Buyers are now facing a cost of £41,000 when moving up the property ladder from their first home, almost 300% more than the £14,000 needed to make the same move 10 years ago.
The research, from Lloyds TSB, shows that nearly two-thirds of current first-time buyers live in a flat or terraced property worth an average of £148,502.
More than half of those surveyed said that they desired to move to a semi-detached property, but with the typical price of a semi being £189,312 this is a 27% premium before factoring in the cost of moving.
While most ‘second-steppers’ – first-time buyers who are selling their first home to purchase their second – expected to rely upon their savings or equity in their existing property to fund the move, one in six said that they were planning to turn to their family for financial assistance.
With nearly 44% of first-time buyers having borrowed an average £13,000 from their family to purchase their first property, it looks like the Bank of Mum and Dad will be getting repeat business.
However, over half of would-be second-steppers are still unable to move due to not having enough of a deposit, with the rising cost of living and increasing property prices contributing to their inability to save.
Weak demand from new first-time buyers has also meant that many have not seen the equity growth they expected in their existing property, widening the gap between the value of their home and their desired purchase. In addition, those who bought at the top of the market or on mortgages with high loan-to-value ratios are struggling with negative equity, further increasing the cost of the move.
‘Second steppers have been hardest hit by the subdued housing market, so it is unsurprising they are struggling to fund the trade up to their second home,’ says Stephen Noakes, mortgage director at Lloyds TSB.
‘To achieve a sustainable housing market we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill.’
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