Homeowners hoping to take their place on the second step of the property ladder face a “very tough challenge”, as affordability for “second steppers” is at its least favourable for over 25 years.
With recent decreases in house prices affecting the equity in their homes, Lloyds TSB estimates that this year will also see fewest house moves since 1974, with 9 per cent fewer than in 2010.
The bank also warned that struggling second steppers were significant in trying get the housing market moving again.
As buyers often stay in their first homes for about four years, many potential second steppers bought their first homes at the peak of the market in 2007, paying up to 23 per cent more than first-time buyers now.
The second stepper affordability measure in the UK now stands at the highest level since records began in 1987 – 5.2 times gross annual average earnings. This has nearly doubled from three in 2001 and is significantly above the long-run average of 3.3, based on the average price of a second stepper home.