Second steppers selling their first home have seen the equity in their property go up typically by £105,000, new research has revealed.
While increased equity on a first home has cut the funding gap for a second home to just over £20,000, the Lloyds Bank Second Stepper report reveals a lack of confidence and uncertainty about moving up the property ladder, with one in three second-time buyers saying it will be harder to sell their home in 2017.
According to the report, today’s average second steppers bought their first property in 2012, when the average price of a first-time home was £140,004, but they will sell their home now for £205,723, providing them with an average equity of £105,068 – around two-thirds of which has been boosted by house price growth over the past four years, with the rest coming from the initial deposit and mortgage repayment.
Lloyds Bank says that the average equity of £105,068 is around a third (32%) of the average price of £331,796 for a typical three-bedroom detached home, meaning that second steppers only need to add an extra £21,005 to their existing mortgage.
Lack of confidence about upsizing
While second steppers may be in a good position financially to buy their next home, 39% of those polled by the bank believe it will be harder to sell their existing home in 2017 when compared to a year ago. And around 34% are thinking about improving their homes rather than moving.
Over a third (35%) of second steppers fancy a move to a period property, while a similar number (34%) would prefer a new-build. Only 18% would consider a renovation project they could do up themselves.
Those polled did, however, have several items on their moving wish list, with 62% wanting a driveway or off-street parking, 59% needing a garden, and a similar number wanting a kitchen-diner. Around half (51%) thought that a garage was important.
Lloyds found that 48% of the second steppers they polled would like to live in a town, while 39% would prefer a quieter village.
Andrew Mason, mortgage director at Lloyds Bank, says: “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.
“They 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.”