New research suggests it's harder to move up the ladder than to get on to it in the first place.
It’s not just first-time buyers having a tough time of it at the moment – first-time sellers are also in a tricky position, with declining home affordability and falling house prices eating up equity.
Lloyds TSB has launched an annual Second Stepper report, and it makes for pretty grim reading. In fact, it even suggests that second steppers face more challenges than first-time buyers. Almost two-thirds (61%) of second steppers said they had intended to move up the ladder in the past 12 months, but had been unable to do so due to a number of challenges they faced.
The main challenges are:
Raising a new deposit
More than seven in ten second-time buyers admitted concern about the higher level of deposit required for their second property. Indeed, more than a third (36%) said they had no deposit in place, and that this was the main problem they faced in climbing the ladder.
The average deposit for a typical second stepper in 2011 was £60,670, more than double the amount needed in 2011 (£24,783).
Falling equity
Almost one in five second steppers do not have enough equity in their current property to move. This jumps to 26% in Scotland. According to Lloyds, the typical second stepper is in negative equity to the tune of almost £10,000.
If you're in negative equity, check out this video for tips on how to get out again.
Rising cost of moving
Half of second steppers highlighted the fees and charges associated with moving home as one of the main challenges they faced in moving up the ladder. This is a particular problem in the south of England, where it was cited by almost two thirds of second steppers (63%).
The average cost of moving home in 2011 jumped to £8,922, compared to £3,632 in 2001.
There are ways to save money though, as we highlighted in How to cut the cost of moving home.
Affordability
Home affordability is at its least favourable level in more than 25 years, and is now less favourable for first-time sellers than for first-time buyers.
Lloyds calculates affordability as the the average price of a second stepper home (minus the equity) compared to average earnings. So for second steppers, the affordability ratio is currently 5.2 times gross annual average earnings. Compare that to just 4.1 times for first-time buyers.
What’s the answer? Should the Government and lenders take steps to help second steppers move up the ladder? Or is this just part of the house price correction? Let us know what you think in the comment box below.
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