Second-time buyers face worst "bottleneck" conditions for 25 years
Home affordability is worse than for first-time buyers claims new report
Alex Johnson has been part of The Independent's online team since 2007. He has been writing about microarchitecture on his internationally-acclaimed Shedworking blog since 2006 and is the author of Shedworking: The Alternative Workplace Revolution. His latest book is Bookshelf, published by Thames & Hudson.
Wednesday 29 August 2012
Homeowners planning to take their second step on the property ladder are facing the worst market conditions for a quarter of a century, according to the latest figures from Lloyds TSB.
Their research shows that:
* Home affordability for second steppers is worse than for first-time buyers
* Second steppers’ equity position accounts for just 5 per cent of the price of a typical second stepper home compared with 44% in 2005
* Homemovers account for the smallest share of homebuyers since 2001
* The average homemover deposit in 2012 was £61,536, a rise of 70 per cent from the average of £36,280 in 2002
Housing affordability for 'second steppers' is almost five times gross annual average earnings, the second highest ratio since records began 25 years ago. This affordability measure has risen over the past decade from 3.2 in 2002.
Home affordability for second steppers is also less favourable than for first-time buyers, 4.7 times gross annual average earnings compared with 4.1.
Suren Thiru, housing economist at Lloyds TSB, said: "It is very concerning that the challenges facing those attempting to take their second step on the housing ladder are the toughest for more than a generation. This follows the significant decline in house prices over recent years and the subsequent erosion of equity among those who bought for the first time at close to the peak of the market.
“The current problems facing second steppers have serious implications for the wider housing market, creating a bottleneck that significantly limits the number of homes available to first-time buyers as well as stopping many homeowners who need to move, possibly for family reasons, from doing so."
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