Forget the first time buyer (FTB) the latest research shows it is the first time seller or ‘second stepper’ that is stuck.
The Lloyds TSB annual ‘Second Stepper’ report looks at what those who have gained their foothold on the first rung of the housing ladder are now doing to move further up in this ‘challenging housing market’. It shows that the majority (61%) have wanted to move in the last year but find themselves firmly stuck where they are.
22% of those asked believe that it is now harder to move up a further rung than it is to get on the ladder in the first place, 43% feel that it is at least equally as difficult. This is backed up by the increased size of deposit needed for a second stepper to move up the ladder, in 201 it was an average of Â£24,783, by 2011 this had become over twice as much at Â£60,670.
The main problem for them, says the report, is that many bought their properties at the height of the market so are hit by prices that are still relatively high, negative or no equity, the aforementioned requirement for larger deposits as well as a lack of buyers.
Some 18% of second steppers are locked in a house due to the lack of equity remaining in it. In Scotland that figure is 26%. According to Lloyds TSB the typical second stepper will be in negative equity to the tune of Â£9,902.
49% of people said that the cost of moving, which has risen by 69% from Â£3632 in 2001 to Â£8,922 in 2011, was also a ‘major challenge’ to moving home.
72% of those asked said that the government should step in to help people sell their first homes so they can move on. 49% want the financial services sector to come up with mortgage products that will allow second steppers to move more easily.
For the future, 53% said that the housing market will not improve in 2012 and 34% said that it will get harder to sell.
‘Home affordability for first time sellers is at its least favourable level for over 25 years and is now less favourable than for those entering the housing market for the first time.’ Said Lloyds TSB.
And this of course brings many chains of house movers to a grinding halt.
Stephen Noakes, Mortgage Director, Lloyds TSB, commented "First time sellers are now faced with some very tough challenges when trying to make their next move on the property ladder and many are finding it more difficult than getting on the ladder in the first place. 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.”
Lloyds TSB panel of last year’s second steppers gave the following advice:
- Build up your savings as much as you can – you may need a higher deposit than you think and may need to take into account a fall in your equity position
- Be flexible, you will need to be prepared to lower your offer, or even look into renting your property rather than selling it
- Present your house to its best: declutter and redecorate – fix any problem areas prior to viewing
- Explore alternative ways to sell your property, such as private buyers or auction. This could save you money but will also open up your options
- Keep at it and be patient, it may take a while for you to sell your house, but there will be a buyer out there
- Stay enthusiastic