LONDON, UNITED KINGDOM -- (Marketwire) -- 02/04/13 -- This is the third Lloyds TSB Home Movers Review, tracking conditions for those who already own a home. The review is based on data from the Halifax house price database, the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England.
The home mover market has remained relatively flat over the past year. However, despite seeing some slight improvements, second steppers are still bearing the brunt of the stagnant housing market, according to the latest Lloyds TSB Home Movers Review.
-- Lloyds TSB estimates that there were around 319,000 home movers in 2012, largely unchanged from 2011.-- Second steppers' current equity position would account for just 7% of the price of a typical second stepper home. Compared with almost half (42%) in 2005.-- The average home mover deposit in 2012 was GBP 61,743. This is a rise of 59% from the average of GBP 38,866 in 2002.
The Lloyds TSB second stepper housing affordability measure - calculated as the average price of a typical second stepper home(1) less their current equity position(2) as a ratio of average earnings - stands at 4.6 times gross annual full-time average earnings for 2012. This is significantly higher than a decade earlier when the ratio was 2.9 times gross annual average earnings, and well above the long-term average of 3.3.
However, second stepper affordability has improved slightly on the previous year - the Lloyds TSB measure reached its highest level, 5.4, in a quarter of a century in 2011. As more time passes since the peak of the market and the subsequent fall in house prices in 2007-8, a higher proportion of potential second steppers will have bought their first property when house prices had already fallen from their peak. Despite this, second steppers in aggregate still face considerable challenges.
Low equity levels creating a barrier for second steppers
The typical potential second stepper in 2012 would have bought their first home in 2008(3). Such a homeowner is, on average, estimated to have an equity level of just GBP 11,500(4) - equivalent to 7% of the average price for a semi-detached house (GBP 162,170). With the average cost of moving estimated at close to GBP 9,000(5), this level of equity leaves very little to put down as a deposit on the next home. In addition, there are also many potential second steppers who bought at the peak of the market in 2007. Many of these homeowners are likely to be in an even worse financial position, often with negative equity. It may also be the case that some first-time buyers who had bought before or after the market peak could also be facing problems moving along the property ladder.
This situation is in stark contrast to 2002 when second steppers had an average equity level of GBP 45,000 - equivalent to 38% of the average price for a semi at the time.
South East is the least affordable area for second steppers
The South East is the least affordable UK region for second steppers with an average affordability ratio of 6.3, followed by London (6.1). The West Midlands and East Midlands (both 4.0) are the most affordable regions for those in their first home looking to take their next step on the property ladder. (See Table 1)