Second-steppers stuck in small flats - as houses grow faster
People planning to move up the property ladder and into their second home are in for a horrible shock: because the way that property prices are rising is making it more difficult. You may feel richer every day as the value of your flat rises, but compared to how house prices are rising, you're actually worse off every day.
A study by Switch has revealed a shocking level of complacency. Some 61% of second time buyers haven't saved anything for the move, and almost half (44%) of second time buyers don't have any plans to save either - because they expect the equity they have in their current property to easily pay for their next one.
Unfortunately, there's a good chance it will fall short.
The problem is that 62% of second steppers want to buy a house for their next property, and the growth in house prices has outpaced the rise in the value of flats for the past ten years. Over the past decade, British house prices have shot up by 21%, while flats have increased by 15%.
In some areas the differences are striking: with a 16.5% difference in Preston, 10% difference in Colchester, and 9% in York. The five hardest places to move up the ladder are Preston, Colchester, York, Nottingham and Bournemouth.
Add to this the costs of moving house - from the stamp duty to professional fees and removals - which can run to as much as £12,000 - and you can see how easy it is to run into difficulties if you don't have anything saved for a house move.
Easier moves
There's better news for second steppers in other areas. Flat prices have actually risen faster than house prices in some areas, so in each of the five places where it's easiest to move up the ladder, flat price rises have outpaced houses. In Aberdeen they have risen 10% more, Wolverhampton 3.5% more, Bradford 1.7%, Dundee 0.9% and Milton Keynes 0.9%.
However, even in these areas, the cost of moving can make the process very painful, so uSwitch recommends putting plenty of money aside before you want to move. Of course, this is far easier said than done, and will require taking on a tighter budget, and possibly shopping around again for everything from utilities to mobile packages, media services and groceries.
However, if you are considering taking on a larger mortgage, it could be an opportunity to juggle your spending to prepare your household budget for the shock.
