The plight of first-time home buyers receives a lot of media coverage and government attention. It is by helping first-time buyers get into the property market that socio-economic ills, such as “live-in adult-children syndrome,” can be alleviated after all. Yet, in order for first-time buyers to have affordable housing options, occupants of modestly-priced homes need to be able to afford to move up the property ladder into larger houses. Recent research by Lloyds Bank has shown the most recent property bubble has made it challenging for “second-steppers” to upgrade, thereby reducing the supply of affordable housing for first-time buyers. However, changing market conditions are alleviating these challenges.
Lloyds Bank revealed that “second steppers” need an average of nearly £60,000 to finance their next purchases, a figure which is double the average amount of money required by first-time buyers (source: Zoopla). In certain areas of the country, there is also a large price gap between the cost of a starter home and the next size up. For example, in East Anglia this price difference is around a whopping £60,000. Despite these challenges, the recent Lloyds Bank survey shows a massive shift in second-buyer confidence compared to 2012 (when people felt that they had to hold onto their first homes in uncertain market conditions).
Over the last year, house prices have shown a rise of nearly 9.6%, offering second-time buyers more equity when they sell their first home. Of course, this is offset somewhat by the larger price tags on bigger homes. Despite this, across the UK nearly half of second-time buyers have admitted that strong house prices have positively influenced their situation and opened up the possibility of moving up the ladder. In the past 12 months, house prices have risen by 9.6%, giving people more equity in their properties when they come to sell. (Source: Property Wire). Now that house prices are likely to stabilise, buyer confidence is returning and encouraging people to make the move.
Here are some other indicators that buyer confidence has increased:
- 40% of second steppers surveyed say that it will be easier for them to sell this year (compared to around 13% who believed this in 2012)
- This year sees around a 10% reduction in the number of people in negative equity
- 60% of people in central London feel that they can move home due to the rising property prices
- Only 37% of second steppers are concerned with raising the deposit they need compared with half of all surveyed second steppers in 2013
- 40% of people believe it will be easier to sell now compared to 2013
- There has been a 7% reduction in the number of people who wanted to move up the property ladder but couldn’t compared with 2013 (54% in 2014 compared with 61% in 2013)
If you are hoping to make the move onto the next rung of the property ladder but are unsure of how to put your house on the market without incurring large agency fees, Tepilo has the solution. As an online estate agent we can dramatically reduce your selling costs while helping you find the right buyer.