Discussions of the difficulties of buying a home tend to focus mainly on first time buyers who are trying to get onto the property ladder, but a recent report from Lloyds Bank suggests that making a second move can also be very hard.
Rising house prices have made it more difficult for homeowners to afford to move into a new property, particularly as many of those who would like to move are looking for larger homes to house an expanding family. Although the values of the properties that the homeowner hopes to buy and sell may have been increasing at about the same rate, the gap between them has also been widening.
The difference between the value of potential second-time buyers’ current homes and the types of properties that they would like to move into has grown substantially over the last few years. It has risen by an average of about £18,000 since 2012. Homeowners who are planning to move into their second property will now need to find an extra £58,400 on average, above what they will make on selling their existing home. To put this number in perspective, it is about double the average deposit paid by a first-time buyer.
The growing financial burden of taking the second step up the property ladder has made it more difficult for homeowners to move on. According to Lloyds, more than half of those currently living in their first home said that they had wanted to trade up during the last year, but had been unable to do it. This isn’t just a problem for those struggling to find their second home, or for sellers who are marketing properties suited to second-time buyers. All of these people who are stuck living in their first home while wanting to move on are also reducing the number of properties available for first time buyers.
However, despite the difficulties, the report also showed that prospective second-time buyers were feeling more confident about their chances of moving on. The 35% who believed that economic uncertainty would make it difficult for them to buy in 2013 has now dropped to 25%, while the number who are worried about finding the deposit for a second home has dropped from 50% to 37%.