An influx of first time buyers and surging house prices have led to an equity boost for many Second Steppers (first time sellers) and given them more confidence in their ability to make the jump to the next step of the property ladder, according to Lloyds Bank.
Second Steppers are the link between first time buyers and the rest of the housing ladder. They are living in the homes that the first time buyers need to buy to keep the market moving. Without movement from Second Steppers, movement on the ladder comes to a standstill on the second rung. Many had previously found themselves stuck in their starter home with little or no equity as the economic downturn took hold.
The current crop of Second Steppers typically would have bought at the bottom of the market in 2009 when prices were at their lowest, with the average price of a typical first time buyer home in 2015 now 31% higher than in 2009. As a result, today’s Second Steppers have an average equity level of £87,096; this is equivalent to 29% of the UK average price of a typical Second Stepper home (£304,963). The estimated average equity level has risen by over £36,000 in the past year from £50,655 due to an increase in the prices paid for first time buyer homes.
Last year saw the highest number of first time buyers enter the market in seven years and this has contributed to Second Steppers being more confident that there is the demand coming through to allow them to sell.
However, despite increasing house prices boosting equity levels for Second Steppers, the findings show people living in their first home still have to find an extra £128,390 to plug the gap between the sale price of their current property and the cost of the house they would ideally move to – typically a detached property. This gap reduces to £17,864 if the Second Stepper moves to a semi-detached home.
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