Two thirds of 'second steppers' in the North West want to move up the housing ladder but can’t

Two thirds of Second Steppers in the North West want to move up the housing ladder but can’t

Second Steppers in the North West are finding that they have an equity shortfall of £55,200 to make the next move to their second home, with the cost of moving increasingly holding them back from moving up the ladder.

Second Steppers were yesterday's first time buyers and they are today's first time sellers, looking to move up the ladder. They are living in the homes that the first time buyers need to buy to keep the market moving. Without movement from Second Steppers, the whole housing ladder comes to a standstill on the second rung.

Two thirds of the region’s Second Steppers (66%) wanted to move in the last year but couldn’t do so, the highest percentage outside of London. With an average funding gap of £55,200 in the North West, the size of the jump between their current property’s estimated sale price (£143,700) and the price they expect to pay for their new house (£198,900) is considerable, and the biggest gap in England, outside of the South East.

Almost all Second Steppers (98%) in the North West feel it is important to save to help fund the next property move, to help build up a deposit. This is 10% higher than the national average.

Nationally, over four in ten (41%) Second Steppers have over-paid on their mortgage in the last 12 months but in the North West this figure is a lot lower, at 34%. This may be down to the fact that residents in the North West are the most confident in the UK about house price rises in the next year, with 86% saying prices will go up, which again is 12% above the UK average.

Andy Hulme, Mortgages Director at Lloyds Bank, said: "Second Steppers are increasingly looking to move into bigger family homes for their next move, and those in the North West will have to find £55,000 now to jump the gap between their current property’s value and the price of their desired second house.

“This means many Second Steppers in the region have been held back from moving up the ladder. However, it is clear that people in the North West are keen to save, and confident about house price rises. This will give them larger savings pots and higher levels of equity, allowing them to put more down in deposits to help them make this big jump up the ladder.”

The number of people in the North West concerned about the size of deposit they required to move also fell in the last year, from over half 54% of Second Steppers in 2013, to 41% in 2014. This again suggests that increased levels of equity are allowing people to put more towards their next deposit. Although confidence is improving, 46% believe that potential interest rate rises are one of the key challenges facing first time sellers, rising by 19 percentage points in a year.

Second Steppers are staying put for 12 months longer than planned.
Second Steppers in the North West are, on average, spending 12 months longer in their first property than they expected as they continue to build up equity. The average Second Stepper in the North West spends four years and one month in their first home. Only 9% intended on staying put for over six years, however in reality, over a third (30%) have done this.

Second Steppers are the link between first time buyers and the rest of the housing ladder. They are living in the homes that the first time buyers need to buy to keep the market moving. With Second Steppers taking longer to move from their first house up the housing ladder, supply of existing first time buyer homes is reduced, potentially increasing the difficulty for many to get on the housing ladder in the first place. Without movement from Second Steppers, there is increased importance of a good supply of new homes being built to ease pressure on the first rung of the ladder.