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First-time sellers lack confidence in housing market

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Second steppers have a decent equity cushion but worry they won't be able to sell
First-time sellers lack confidence in housing market

Second-time buyers expect it to be hard to upsize this year, according to Lloyds Bank.

Despite favourable conditions, two out of five (39%) second steppers think it will be more difficult to sell their existing property this year compared to 12 months ago, versus just one in five (18%) in 2015.

Around one in three (34%) are also considering staying put and improving their home rather than moving.

The bank found that over a quarter (26%) are worried about the uncertain economic climate, deposit size remains a key challenge (29%) and a third (32%) are struggling to find the right property.

Equity windfall

Despite their concerns, higher house prices have increased the equity of those still living in their first homes, with 45% feeling that their equity position has improved over the last year.

Today’s typical second steppers bought their first property in 2012, when the average price of a first-time home was £140,004. Based on the latest house price figures, selling their home now for the average first-time buyer house price of £205,723 would provide them with equity of £105,068 – around two-thirds of which has been boosted by house price growth over the last four years, with the rest coming from the initial deposit and mortgage repayment.

Moving up

The gap between the sale price of their current property and the cost of their ideal home – typically a detached property – is £126,000.

However, the average equity level of £105,068 from the sale of their first home can help to reduce this gap by 83%, meaning that second steppers need only add an extra £21,005 to their existing mortgage.

Andrew Mason, Lloyds Bank mortgage director, said: “Second steppers are yesterday’s first-time buyers and the conditions to help them climb to the next rung on the property ladder are better than they’ve been for over four years.

“Despite this, many still feel that things are tough out there and that it’s getting more difficult to sell your first home and move up the ladder.”

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