Lloyds TSB: Housing market difficult for 'second steppers'

Monday, 19 December 2011 08:40

A new study has shown the difficulties faced by people who have already bought their first home and intend to move up the property ladder, so-called second steppers.

Research carried out by Lloyds TSB for its Homemovers Review looked at data from the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England to determine the average price for a second stepper.

This was based on the equity position of their current home as a ratio of average earnings based on a single income.

It was found that affordability for next homes is at its lowest for more than 25 years, at 5.2 times gross annual average earnings in October 2011.

This is almost double that seen in 2001 and much less favourable than the 4.1 for first-time buyers.

The decline in house prices since 2007 and a resulting drop in equity was blamed for the phenomenon, with average second-steppers thought to be in negative equity of £9,9025.

People in the south-east and London are most likely to be affected by unaffordable next homes, while the West midlands and East Midlands were the least affected areas.

Housing economist at Lloyds TSB Suren Thiru said: "The issue of second stepper affordability is a key one in trying to get the housing market moving again, with the current difficulties in this segment of the market restricting the supply of starter properties for first time buyers as well."

Earlier this month, a survey by the Building Societies Association found that only 12 per cent of respondents said they intend to buy in 2012, with 63 reporting they will be staying put.

From first time buyers to remortgages. Get advice on a mortgage to suit you

• Tags:
• house prices
,
• lloyds tsb
,
• mortgages
,
• news
,
• property market
,
• remortgages