The third annual Second Steppers report from Lloyds TSB indicates that little has improved in the past year for those first-time sellers looking to take the second step on the housing ladder.
61% of second steppers had wanted to move up the ladder in 2012 but were unable to. Meanwhile, 53% of second steppers agree that market conditions haven’t improved for them compared with the previous year.
Raising a deposit (65%), a lack of affordable housing to move into (53%), the high costs associated with moving including stamp duty (52%), negative equity (25%), and a lack of offers from potential buyers (25%) are still key issues for many second steppers.
However, 31% think the housing market will improve this year, and 22% think it will be easier to sell their property this year.
22% of respondents believe it is actually harder to move up the ladder than it was to get on it in the first place, while 46% of second steppers believe it is equally difficult to move up the ladder, than it was taking the first step onto it.
Second steppers are currently looking to stay longer in the first home, a sign that market conditions are changing their expectations. In 2010, they expected to spend four years in their first home, whereas now they are more likely to plan to stay for five years. On average, second steppers have already had their home on the market for seven months, whilst one in eight (12%) have also previously marketed their property.
53% are looking to move as their current property is too small for their needs; 24% are expecting to start a family and need more room; 44% plan to move to a new area, whilst 12% are relocating for work.
‘Second stepper’ affordability is worse than for first-time buyers. 38% of second steppers blame the lack of affordable housing available as a key reason they have been unable to move up the ladder, whilst 15% are waiting for property prices to come down and be more affordable before making the move.
Home affordability for first time sellers is lower now than a decade earlier, although it has improved marginally in the past year. The Lloyds TSB housing affordability measure – calculated as the average price of a typical second stepper home, less their current equity position as a ratio of average earnings – stood at 5.2 times gross annual average earnings in November 2012. The ratio is almost twice the figure recorded a decade earlier (2.7) and highlights that affordability for second steppers is also now less favourable than for first time buyers (4.3).
Additionally, the costs associated with moving are creating another barrier, with 32% of second steppers agreeing that stamp duty it is too high, while 20% are concerned about the overall cost of moving.
Stephen Noakes, mortgage director, Lloyds TSB, said: “Despite recent improvements in the housing market, first-time sellers continue to be faced with some very real and tough challenges when trying to make their next move on the property ladder. It is vital that this group of home movers receive more support and attention as they play an intrinsic role in getting the housing market moving again.
“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, and this bottleneck will not only restrict the supply of starter properties but will have a knock on effect across the whole of the housing market.”
31% of second steppers believe the housing market will improve this year, while 22% think it will be easier to sell their property this year.
49% of all respondents also believe the mortgage market has improved over the past year, with 20% of respondents specifically pointing to better mortgage deals on the market for second steppers, and a similar amount (17%) believe more mortgages are available. As a result, 46% think this will help them make the move in the future.
However, the majority of first-time sellers agree that more help is needed. 23% think the new Government schemes, for example NewBuy and Funding for Lending, will have an impact on them and help them to move up the property ladder, however, 57% do not feel they will have an impact on this group of home movers. As a result, 73% want more support from the Government and 86% would like their mortgage lender do more.