Absence Of First-Time Buyers Helps Keep Second Steppers Trapped

Date Published 11 March 2013

Nearly two-thirds of first-time home owners who wanted to move up the property ladder last year found themselves stuck.

In two damning reports, they have been labelled the ‘ugly ducklings’ of the housing market – overlooked and struggling to move on with their lives.

Their challenges included lack of demand from first-time buyers, negative equity, and high deposit requirements from mortgage lenders.

Those trying to sell had had their property on the market for an average of seven months. One in eight had tried to sell their property before, without success.

A Lloyds TSB report says 61% of second steppers – former first-time buyers wanting to move – felt trapped. Of that number, 22% said it was harder to move than to get on to the property ladder in the first place.

A similar report by Rightmove underlines the situation thousands of second steppers find themselves in. According to the Rightmove study, the supply of first-time buyers is at its lowest for more than two years, helping to keep second steppers trapped.

In six out of ten regions, Rightmove says the proportion of first-time buyers is under 20% – meaning that second steppers have very few potential buyers for their properties.

Some (7%) have put off starting families because they cannot move, and 11% are moving despite having to take a loss on their first home.

According to the Lloyds report, one in six second steppers has no money saved at all for a deposit, while 28% do not have enough, and 11% said they have found they needed a bigger deposit than they had expected.

Two in five have lost some or all of the money they had put down on their first property, because of a fall in house prices since their purchase.

Over half of first-time home owners need to move as their current property is too small for their needs, while others need to move for work or other reasons.

Lloyds TSB managing director Stephen Noakes said the research showed that first-time sellers are facing tough challenges.

He said: `It is vital that this group of home movers receive more support and attention, as they play an intrinsic role in getting the housing market moving again.

`To achieve a sustainable housing market we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill, and this bottleneck will not only restrict the supply of starter properties but will have a knock-on effect across the whole of the housing market.`

The Rightmove report says that second-time buyers are a neglected and important part of the property market, and that aged typically 41, they are weighed down by worries over space, age and kids.

Rightmove director Miles Shipside said: `Second steppers are the ugly ducklings of the housing market.`

It does not look as though second steppers will find life much easier in the foreseeable future with house prices looking as though they may be creeping back up.

Last week, Halifax – part of Lloyds – said house prices rose by 0.5% in February, taking them 1.9% higher than year ago. According to Halifax, the average house price is now £163,600.

The figure, based on mortgage approvals, is 18% below Halifax’s record price of£199,612 in August 2007