31 Aug

Second-time buyers facing constant struggles

Second-time buyers facing constant struggles

While the needs of people trying to get their first foot onto the property ladder have been well documented over the course of the last years, there are also other people in the UK that are suffering just as badly, sometimes as a result of the problems first-time buyers are experiencing.

It has recently been reported that people who are trying to move to new houses via the traditional methods of upgrading from a smaller property are finding increasing difficulty in doing so thanks to the stagnation at the entry point of the market.

Much of this issue has come from the fact that the government has looked to bring about changes that help first-time buyers and homebuilders while offering little to those who are further up the ladder.

For example, the FirstBuy incentive, under which those taking their first foray into an estate agents are able to buy a newly built house with just a five per cent deposit, has been heavily criticised for not looking at the market as a whole.

Dominik Lipnicki, director at Your Mortgage Decisions, for example, said that the scheme was only serving to take out an essential part of the traditional property market; first-time buyers buying houses that are perfectly sized and priced for them.

"The real problem is that we have lost fluidity with little movement even in areas where house prices have recovered. This scheme has further contributed to this stagnation by taking a proportion of first-time buyers out the market."

This is the main issue which is causing stagnation for people in homes who are looking to move onto their next property, as they find that there is no-one to buy their home, forcing them to drop the price in a desperate bid to sell.

"Clearly if you are trying to sell your own first-time purchase, you now have fewer buyers to choose from and this has had an impact by further slowing down the housing market as even less existing stock is sold," said Mr Lipnicki.

This has caused the problem that many are seeing now. A report released this week from Lloyds TSB has shown that people operating in the market for second homes are finding themselves well short when it comes to finance.

The occurrence happens because they have purchased homes and then seen little in the way of prices increasing, leaving them with a property which they have just five per cent equity on for the purchase of their next home. This is poor in comparison to the 44 per cent which was reported just seven years ago.

In addition to this, second timers are also now finding themselves facing 70 per cent higher prices when it comes to mortgage deposits now than they were in 2002, when it was the case that they would have had to have raised just £36,000.

"The current problems facing second steppers have serious implications for the wider housing market, creating a bottleneck that significantly limits the number of homes available to first-time buyers as well as stopping many homeowners who need to move, possibly for family reasons, from doing so," said Suren Thiru, housing economist at Lloyds TSB.ADNFCR-1222-ID-801440211-ADNFCR

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