Low mortgage rates, high demand for housing and high employment levels are said to be behind a slight rise in home-mover numbers in 2017. Research from Lloyds Bank suggests the number of home movers rose 2 per cent year on year to 370,300 in 2017.
Until recently, a highly competitive mortgage market had resulted in record-low borrowing rates, particularly for those with significant equity in their property. Employment has reached record levels in recent years, with unemployment at a 40-year low in the final quarter of 2017.
The housing shortage also remains a factor in maintaining high prices, with government initiatives such as quantitative easing, Funding for Lending and Help to Buy all contributing – helping either demand in general or first-time buyer (FTB) activity. FTB numbers rose 6 per cent to 359,000 in 2017, matching their 2007 peak.
Consequently, there are more opportunities for a particular type of home mover, so-called ‘second steppers’ – homeowners looking to move from their first house purchase to their next property. This group – effectively first-time sellers – are usually couples and young families looking to secure more space and a garden.
Today’s typical second steppers bought their first property in 2014, when the average price of a FTB property was £167,100. Based on current house prices, selling their home for the average FTB price of £211,300 would give them equity of £85,900, up from £68,600 four years ago. Lloyds calculates the gap between the sale of their property and their ideal home is about £136,000, thus with the equity in their property they need add only £50,100 to their mortgage. Average figures vary by region. Second steppers in Northern Ireland need to find only £73,500 to move to their ideal home, while those in London need £330,600.
Regrets
Some 64 per cent of second steppers admitted having regrets over their first property purchase. Just over 10 per cent said that they had rushed to get on to the property ladder and hadn’t considered all the details of the property they purchased.
More than a third wished they had bought a larger property. Not surprisingly, the ideal home they are looking to buy should have a driveway or off-road parking (61 per cent), a garden (59 per cent) and a kitchen/diner combination (56 per cent).
While many second steppers have benefited from equity gains that are enabling them to move up the ladder, they remain concerned about the state of the economy, the size of the deposit required and a shortage of suitable properties. Despite improvements to market conditions over the past five years, 35 per cent of respondents believe it will be more difficult to sell their property this year.
Since the typical second stepper bought in 2014, the interest rate rise in November 2017 was the first they had experienced as borrowers. Lloyds says many see potential further rate increases as their biggest challenge to moving up the property ladder.
Recent soundings from the Bank of England suggest more rate hikes are on the way, and they may be steeper and more frequent than previously thought. Ultimately, the research suggests there is a lack of confidence about selling among both these homeowners and movers in general.
