Next-time buyers are having it even tougher than first-time buyers, says a new report from Lloyds TSB.
It says that the housing market has become the most unaffordable for ‘second-steppers’ in 24 years.
Many bought at the peak of the housing market in 2007 but are now unable to move on, having seen the value of their home fall by an average of 23%, leaving them £10,000 in negative equity.
The second-steppers, typically aged between 25 and 34, also need to earn more than first-time buyers in order to make their move – and persuade someone to give them a mortgage.
In the South-East, the average price of a second-time home means a second-stepper would have to borrow nearly seven times average earnings.
Even in the Midlands – the most affordable region for second-time homes – someone trying to move up the property ladder would have to borrow four times their average salary.
The home affordability ratio has risen to 5:2 for second-time buyers – the highest level since records began in 1987. The ratio for first-time buyers is 4:1. In 2007, the reverse was the case.
Suren Thiru, housing economist at Lloyds TSB, said: “The issue of second-stepper affordability is a key one in trying 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 as preventing many of those who need to move from doing so.”
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Comments
Perhaps LTSB would be good enough to advise us all what "an average second-time home" actually is?
And whiile they are on, maybe they could define an "average first-time home" also - just so Agents can avoid giving would-be buyers the wrong leaflets and tell them what they SHOULD be aspiring to - instead of three bed semis...
@Industry Observer
Ah, joined up thinking? Do you mean that the government should....................do something? You want action and you want it now? Not quite sure what it is but you want it anyway?
I go along with that fan of small government, Ronald Reagan: "Don't just do something. Stand there!"
Spot on Chas, inflation will sort this out in a few years.
Now, the next comment might sound both off topic and a bit weird, but stick with it...
It is after all the way the Germans dealt with the cost of the 1st World War.
After they lost, the Allies handed them the bill in German Marks. On purpose, the Germans went through a period of hyper-inflation and the bill essentially vanished.
Naughty war mongering Germans = Dodgy bankers & stupid politicians?
(BTW - I have nothing against Germans as such, it is just a good example of Harsh Economic Realities).
Mind you it reminds me of that old football chant.....!
Chas what people will need is secure employment otherwise they can have whatever deposit or equity you like but they won't be able to borrow.
Chilling out and waiting are the last things needed at the moment Chas what is needed is some bright and joined up thinking.
Time is a great healer. Just as the price of FTB type homes has fallen to what FTB's can afford, so will the prices of second-stepper type properties.
People just need to chill out and wait rather than bleat about the perceived unfairness. "I want it now but I can't have it now, it's not fair, the government should do something.........blah, blah, blah". We've turned into such a nation of whingers.