It looks as though there is finally a glimmer of hope in the UK property market, at least for second-steppers who are looking to move from their first home into something a little bigger, over the coming year. A combination of rising house prices and an increased range of affordable mortgages have contributed to second-steppers being in a far better position than they were even just twelve months ago.
Up the Property Ladder
Recent research released by Lloyds Bank has outlined that 337,500 homeowners moved up the property ladder last year, made possible mostly due to the increased level of equity in their homes and the increased number of affordable mortgages. Those who bought their first home in 2008, as an example, have built up an average of £41,286 equity and, when taking into account the fact that the average cost of a homeowners second home is £174,240, this equates to 24%. Just twelve months ago, the average equity of these homeowners had in their properties was just 13% and in 2012 was only 1%. You can see from these figures alone how much growth the property market is seeing and it certainly gives faith for those already on the property ladder and looking to step up a level.
Why the Change?
In 2013, there was an increase of 7.5 in house prices and the three month growth to January 2014 was again 7.3% up from the same period last year. The reasons behind such strong growth, however, can be outlined in three main ways.
Firstly, there is still a lack of new housing supply, a simple economic principle which pushes up prices. When there’s a greater demand than supply, it makes sense that prices will rise, as they do with anything. Secondly, we’ve seen only a slight increase in the number of homeowners putting their properties up for sale, further leaving a gap between supply and demand and thirdly, the choice of affordable mortgages has increased substantially over the past twelve months, especially for those with only a relatively small deposit.
Of course, a factor which affects second steppers is the rate at which first time buyers are coming onto the market to look for properties and, again, over the past twelve months, an increase in first time buyer activity has also been seen, with Council of Mortgage Lenders stating that December 2013 saw an increase of 37% compared to December 2012.
All in all, there is no denying that the future looks bright for second-stepper home buyers who are looking to make that jump from their starter home to something a little bigger and more comfortable. As more first time buyers come on the scene and mortgages become more affordable, combined with the greater level of financial certainty which many now have compared to previous years, more and more homeowners are making the decision to upsize.
About The Author:
Anthony Hoskisson is the Managing Director of Blackpool based Questa Chartered, one of the region’s only chartered financial services companies, offering a wide range of financial planning and advisory options to both private and corporate clients.