'Second Steppers' stuck on the first rung of the property ladder
28 February 2012
An annual report published by the Bank of Scotland has shown that thousands of first time sellers who would like to move up the property ladder and into their next home are stuck due to the state of the housing market. These so-called ‘second steppers’ are experiencing a range of issues. The problem has apparently affected two thirds (65%) of those surveyed who have been looking to move in the past 12 months. For this group, the survey revealed a pessimistic outlook with over half (56%) predicting that the situation would not become any better this year.
There are a number of factors contributing to the problem. 65% said that the increased level of deposit now required was a major factor that was prevented them moving. The average deposit for a typical Scottish second stepper was £60,670 in 2011, more than double the average deposit required in 2001 which was £24,783.
There may be less equity in the property. Around 1 in 5 second steppers do not have enough equity in their property to make the move. This is because property values have typically fallen since this group purchased first-time; the average house price paid by a first-time buyer in Scotland has reduced by around £29,000. The report estimates around 26 % of second steppers are in this position.
These factors, along with a general decline in affordability and the increasing cost of moving home further contributes to the stalemate that these second steppers find themselves in. The Bank of Scotland suggests affordability is at its lowest level for 25 years. The cost of moving house for a home mover in Scotland stood at an average of £6,972 in 2011 – an increase of 69 per cent in comparison to 2001. These costs include all the associated legal fees as well as mortgage fees and removal costs.
Carol Anderson, Head of Mortgages at the Bank of Scotland, said: “To achieve a sustainable housing market in Scotland 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.”
Although the report suggests that around 65% are trying to increase their savings in order to fund a move, this will not be practical in every case where salaries are being frozen and the cost of living is rising. 76% of those surveyed would like to see the Government step in to help those trying to sell. For many who are keen to work their way up the property ladder, it will be a case of saving hard and waiting for the market to pick up again.