Bank of Scotland

Second steppers in Scotland continue to struggle but there are signs of hope for 2013

09 March 2013

Whilst recent data suggests that first-time buyers are starting to return to the housing market following a raft of Government schemes in 2012, the annual Second Steppers report from Bank of Scotland indicates that little has improved in the past year for those first-time sellers in Scotland looking to take the second step on the housing ladder.

Almost two thirds of second steppers (61%) in Scotland wanted to move up the ladder in 2012 but were unable to as they face an increasing number of challenges. Additionally, almost a fifth (18%) of respondents believe it is actually harder to move up the ladder than it was to get on it in the first place, whilst almost half (47%) of second steppers believe it is equally difficult to move up the ladder, than it was taking the first step onto it.

Second steppers in Scotland are currently looking to stay longer in the first home, a sign that market conditions are changing their expectations. In 2011, they expected to spend four years in their first home, whereas now they are more likely to plan to stay for five and a half years. On average, second steppers have already had their home on the market for thirteen months, whilst one in ten (9%) have also previously marketed their property.

Over half (53%) are looking to move as their current property is too small for their needs; 26% are expecting to start a family and need more room; 38% plan to move to a new area, whilst 14% are relocating for work.

Raising a deposit remains a key barrier
Two thirds (66%) of second steppers in Scotland believe that the level of deposit required is the main challenge for them being able to arrange a mortgage, and as a result is a key reason they have not been able to move up the housing ladder so far.

In particular, one in twenty (6%) say they don't have any money saved to put towards a deposit and one in ten (12%) don't have enough of a deposit saved at present.

Almost half of second steppers have lost some (36%) or all (11%) of the deposit they paid on their first property, due to declining house prices since they purchased their first home. The average house price paid by a first-time buyer has reduced by £28,345 since the typical second stepper in 2012 bought their first home in 2007. The average deposit for a typical second stepper in Scotland in 2012 was £37,057, four times more than the average deposit required in 2002 (£9,053). Meanwhile, the research indicates that Scottish second steppers have on average just over £33,000 of equity in their current property, with over a third (34%) having less than £20,000, leaving a considerable equity shortfall. Three fifths (60%) expected to have more equity in their property by now.

Second steppers in Scotland are doing what they can to make the move up the ladder as soon as possible, with two thirds (66%) saying they are saving to fund the move. Within this, 36% continued to save after buying their first home, whilst 20% have started saving again specifically to fund their move. Separately, over a third (34%) are overpaying on their mortgage. Savings are set to play a key part in funding the deposit needed to move with three fifths of second steppers (65%) expecting to use savings to help raise the deposit for their next home.

Laurence Mann, Head of Mortgages, Bank of Scotland explains:
"Despite recent improvements in the housing market, first-time sellers in Scotland continue to be faced with some very real and tough challenges when trying to make their next move on the property ladder. It is vital that this group of home movers receive more support and attention as they play an intrinsic role in getting the housing market moving again.

"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."


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