In recent months there has been a lot of media coverage around first time buyers who have struggled to get on the property ladder due to the high deposits and soaring house prices in the UK. However, a combination of falling house prices, mortgage shortages and few first-time buyers, the second time buyer category is also taking a hit according to the latest report by Lloyds TSB.
Typically, first time buyers remain in their home for around 3 to 4 years and then, for one reason or another, outgrow their current home and want to move, typically to something larger. However, first time buyers that fit into this category would have bought their homes at the peak of the market and are now finding it extremely difficult to trade up.
The report estimates that around 9% of those looking to purchase their second home are in negative equity while 18% do not have the appropriate amount of equity in their homes to make a move. The decrease in house prices since this group bought a home is startling, with an average decrease of around £28k per house. To make matters worse many of these homeowners do not have a financial cushion as they put down relatively small deposits.
These groups of individuals are in choppy waters as around 43% of them have not been able to save any money since they first got on the ladder to help them get out of the predicament. And with their target market (first time buyers) in a bad place they are rapidly running out of options to move.
All in all, the reality may be that these groups of individuals may have to play a sit and wait game with their home and hope that the situation improves in years to come.