Homeowners looking to move to their second home will have made £86,000, on average, on their first property, but still need to find another £50,000 to move up the property ladder, according to new research.
Today’s first-time sellers, or so-called ‘second steppers’, typically bought their first property in 2014 for an average price of £167,137 and would sell it now for £211,296, Lloyds Bank researchers have revealed. This would give them £85,877 towards their next home.
However, the bank’s annual Second Stepper report reveals that the price gap between the sale of their current property and their potential second home now stands at £135,985, so they will need to add an extra £50,108 in savings or additional mortgage payments.
The study found that there are significant regional variations: homeowners in Northern Ireland would sell their homes for £121,370 and would need an extra £73,499 in savings or mortgage payments to move to an average-price second home costing £194,818. In contrast, Londoners would sell their first home for an average of £422,329 and would typically buy their next home for £733,939, leaving them with a shortfall of £330,599.
Researchers also found that 64% of second steppers – who are mainly couples or young families – have regrets about their first home, with more than a third wishing they had purchased a bigger property. Just over one in 10 say they rushed to buy their first home without looking into it in enough detail.
Just over 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. While 29% are concerned about the uncertain economic climate, 30% were worried about having a large enough deposit and 26% find it hard to find the right property.
On these homeowners’ wish lists were a driveway or off-street parking (61%), a garden (59%) and a kitchen/diner (56%).
Put off by the cost of moving, more second steppers will now consider home improvements – up from 34% in 2016 to 40% in 2017.
Andrew Mason, director at Lloyds Bank Mortgages, says: “Second steppers are optimistic about the market conditions, which are now better than they’ve been for over five years, and with many building up substantial equity in their homes and more first-time buyers entering the market, their next move may not be far away.
“However, the interest rate rise we saw 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.”