Housing affordability for the typical second stepper has improved in the past year, an economist at Lloyds TSB said today, despite a new report which found that the average age of a home-mover trading up to a new property had risen to 40.
Nitesh Patel added:
[There] are many potential second steppers who are still in their first home which they bought in the run-up to, and at, the peak in house prices in 2007.
Many of these homeowners may still be unable to move due to having either very low, or negative, equity in their homes.
Prices paid by second home-movers have fallen by 10% to an average of £212,586 since 2008 but have grown 3% in the past year to increase the squeeze on growing families looking for more space, new figures show.
According to the figures from Lloyds TSB:
In June 2013 the difference between "equity position" and "second stepper" home was 4.4 times the level of average annual earnings - an improvement on 4.9 a year earlier
London was the least affordable with a ratio of 5.7 with the East Midlands and West Midlands, both at 3.1, on the opposite end of the scale
On average, second steppers had equity of £21,200 or 13% the value of an average second-step home, much better than the 1% of last year
It compares badly with 2005 when the typical second stepper was able to fund nearly half (44%) of their property with equity built up in the first
The average equity was also far short of the average home-mover deposit of £70,540 - a figure that rose to £126,528 in London
Affordability has improved slightly for so-called "second steppers" - those looking to trade up from their first properties - but has left many of those who bought before the market crashed stuck with low or negative equity in their homes, according to a new report.
This happens when the high price paid for a property falls to near or even below the outstanding mortgage payable, meaning if sold the homeowner would be left with very little equity or even in the red when it is paid off.
Those affected cannot afford to move as they rely on having built up equity - the sum of their original deposit, plus the amount they have paid back and any rise in the price - to be able to trade up.
The greater the difference between this "equity position" and the typical cost of a "second stepper" home, the more difficult it is for potential buyers to get a mortgage to cover the cost of a move.
The average age of a home-mover trading up to a new property has risen to 40 as many younger people remain trapped in houses or flats they purchased as first-time buyers before prices crashed in 2007.
Figures from Lloyds TSB suggest that while government initiatives such as the Help to Buy scheme have given new first-time buyer numbers a boost, many young families are still struggling to move up into bigger properties years after they acquired their first starter homes.
The report showed that the average age of a home-mover had risen from 37 in 2002 to 40 today, with the majority of the increase since 2007.