But although second steppers, defined as those home owners still living in their first home but looking to take their next step up the property ladder, have seen affordability improving in the past year, it has declined in the past decade.
Housing affordability is calculated as the average price of a typical second stepper home less their current equity position as a ratio of average earnings and it stood at 3.9 times gross annual average earnings in June 2013.
This measure of affordability has risen significantly over the past decade, signifying a decline in affordability, from 2.6 in 2003. There has been a modest improvement since June 2012 when the ratio stood at four.
The typical potential second stepper in June 2013 bought their first home in 2008 is, on average, estimated to have an equity level of £13,985, equivalent to 10% of the average price for a semi detached house at £134, 667 which is a typical second stepper home. This is an improvement on a year earlier when the typical second stepper equity level of £9,498 was estimated to be 7% of the average price for a semi detached home.
Despite this improvement, equity levels for second steppers remain low by recent standards. For example, the typical second stepper in 2007 was able to fund close to half, 48%, of their next home through equity built up in their first property.
In addition, with the average cost of moving estimated at close to £7,000, it is unlikely that the increase in equity over the past year will be sufficient for many potential second steppers to be able to fund a move to their next home.
‘Housing affordability for the typical second stepper in Scotland has marginally improved in the past year. Nonetheless, there are many potential second steppers who are still in their first home which they bought in the run-up to, and at, the peak in house prices in 2008. Many of these home owners may still be unable to move due to having either very low, or negative, equity in their homes,’ said Nitesh Patel, housing economist at the Bank of Scotland.
‘The lack of equity for many home owners in their existing home largely explains why the number of Scottish home movers in the first six months of 2013 rose by only 2% compared with a year earlier; while the number of first time buyers grew by 22 % over the period,’ Patel added.
The research also shows that there were 13,600 home movers in Scotland in the first half of 2013, a rise of 2% on the same period in 2012. During the same period, the number of the first time buyers rose by an estimated 22%. As a result, home movers accounted for the smallest share of all home buyers 56%) since 2001 at 56% compared with 51%. The low proportion reflects both the current difficulties faced by home owners in accessing mortgage finance and a difficult economic outlook.
The average house price paid by a home mover in Scotland has risen by 54% to £59,582 over the past decade, a greater increase than anywhere else in the UK. In the past year average home mover price has increased by 1%. The average Scottish home mover house price stood at £170,534 in 2013, 20% lower than the UK average of £212,586.
The average home mover deposit in Scotland in 2013 was £52,246. This is almost a 50% rise from the average of £35,220 in 2003. Home movers across the UK put down an average deposit of £70,540, 35% higher than the Scottish average.
