MortgagesOct 17 2014

Gap of £60k to move up housing ladder: Lloyds

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Research from Lloyds Bank has shown that those moving from their first to second property need to find £58,400 to fund the move, over double the average first-time buyer deposit which now stands at £25,848.

The gap is £14,900 bigger than in 2013 and £17,900 bigger than in 2012 when the figure was £40,500, the research shows.

The study was carried out among 500 ‘second steppers’ and showed significant regional variations in the perceived size of this gap, with those in East Anglia saying they need £80,800 to make the move to a second property on the ladder, whilst in the West Midlands, people think they need to find just £21,000 extra to make the step to their second home.

Almost half of those surveyed - 46 per cent - say the costs and fees associated with moving house are the biggest barrier to moving up the ladder. Despite this, 40 per cent believe it will be easier to sell this year, almost double the figure of 2013 and treble that of 2012.

Additionally, there has been a decline in ‘second steppers’ who wanted to move up the property ladder but could not do so. Just over half - 54 per cent - wanted to move up the property ladder in the past 12 months but have not yet moved. In 2013 this figure was 7 per cent higher at 61 per cent.

Those in East Anglia are least likely to have been prevented from moving up (42 per cent), whilst those in Central London (67 per cent) and the North West (66 per cent) have found it most difficult to move.

Marc Page, mortgages director at Lloyds Bank, said: “The jump to the next step is growing quickly for second steppers, with the gap to the second home now being almost £60,000 nationally.

“However, as house prices are rising and barriers to the next step are reducing, confidence about selling the first home and being able to move up is increasing. For most regions of the country this is helping people make that jump across the gap to the next rung on the ladder.”

Despite the growing financial gap between first and second properties, confidence in the market is improving. Only a quarter of ‘second steppers’ see economic uncertainty as a key challenge, reducing by 10 per cent over the year.

The number seeing negative equity as a challenge also reduced by 11 per cent, to just 14 per cent of respondents.

Elsewhere, 43 per cent thought rising house prices had a positive impact on their situation and their ability to move up the ladder. Over the last 12 months, house prices have risen by 9.6 per cent giving people more equity in their properties when it comes to selling them.

Across the whole country ‘second steppers’ are looking to pay more than the national average price for their next property - £282,000 - which is a £10,000 premium over and above the national house price average of £272,000.

ruth.gillbe@ft.com