Research focuses on plight of "second steppers"
Published: 1 February 2011 | Author: Bernard Clarke
New research concludes that the average first-time buyer intends to stay in his or her home for four years, and that making a typical “second move” in the property market – from a flat to a semi-detached house – involves buying a home that costs 32% more than the one being sold.
The research, published by Lloyds TSB, focuses on the challenges for what its authors call “second steppers,” those wishing to sell their first home and move up the property ladder.
Lloyds says that second steppers in 2011 face extra challenges because they are likely to have bought their existing home at or near the peak of house prices and are now seeking to move onward in a declining property market. Its research shows:
- Sales of both first-time and second step properties are continuing to decline, while the number of transactions for homes higher up the property ladder has increased. The number of sales of properties below £120,000 fell by 14% in 2010, whiles sales of properties priced between £120,000 and £200,000 declined by 13%. By contrast, there was an increase in the purchase of properties over £200,000, while the number of sales of homes over £500,000 increased by 31%.
- The difference in price between typical first-time buyer and second step properties is more than £48,000.
- The price of the average first-time buyer property has declined by £28,000 in the period since a typical second stepper bought their first home. As a result, almost one-fifth (19%) of second steppers do not have enough equity in their current home to move on.
- A majority of second steppers (84%) expect a first-time buyer to purchase their existing home. But only 13% of second steppers will reduce their asking price if they cannot sell their home for the amount currently being sought.
- A quarter of second steppers will look to rent their property out if they cannot sell it at the current asking price.
The research report says: “The key to achieving a sustainable housing market lies in home-owners moving up the housing ladder, maintaining a fluid movement throughout the market.”
It continues: “Second steppers are living in the homes that first-time buyers need to buy to get the market moving. Without movement from second steppers, movement on the ladder comes to a standstill.
“For many, a necessary move to enable them to start a family or re-locate with work is held back by an erosion of equity and a widening gap between the cost of a first-time buyer and second step property.”