Second Step on the Housing Ladder Proving Challenging for Buyers

Posted on 06 March 2017

Second Step on the Housing Ladder Proving Challenging for Buyers

Lloyds Bank recently reported that ‘Second Steppers’, people moving on from their first home to something larger, are finding it difficult to make that step. Theoretically, they are in a much stronger position than they have been for many years, with the average amount of equity these people have in their properties at an average of around £100,000.


Today’s typical ‘Second Stepper’ bought in 2012 when the average price of a first time buy in the UK was £140,000. The average price of a first time home today is around £205,000 meaning that, allowing for mortgage repayments over that time, there is around £100,000 of equity in their property. Despite these favourable conditions 39% of those surveyed think it would be difficult to sell their existing property this year compared to last. 26% of those surveyed cited uncertain economic conditions as a reason for not making the second step.


This is interesting as, paradoxically, the uncertainties over the economy which would act as a depressing factor on house prices is also restricting supply, helping to push prices up. It was also reported that 32% of those surveyed said that they were struggling to find the right property. Further examination of the figures reveal that more than half require a double garage, a kitchen/dining room and a garden. This would perhaps suggest that ideally people want to make their second move to their ‘forever’ home, whereas in reality there may be a step or two between your first home and your last.


Here in Northern Ireland the picture is slightly different and probably less positive for those looking to make the move from their first home. The amount of equity is likely to be considerably less here than the amount reported by Lloyds as the Northern Ireland property market is still lagging behind the market in GB. As estate agents in Belfast, our estimation of the gap between first and second homes in Northern Ireland is even wider than the £69,000 reported in the Lloyds survey.


For many years there has been a government focus on building new, affordable starter homes with seemingly little regard for the rest of the housing market. The difficulty is that whilst it is important to build houses for first time buyers, it is also necessary to make sure that there are enough suitable properties to which those first time buyers can move as their families grow and their housing needs change.


If this is not properly addressed a ‘blockage’ develops in the system preventing the housing market from functioning efficiently.