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Second step buyers in Scotland face a £115,000 price gap to move up housing ladder

Second steppers in Scotland typically need to find an extra £115,000 to move up the housing ladder to their preferred second home of a detached property, new research has found.

Although sitting on equity windfall of over £48,000 to help reduce the second home funding gap, half of second time buyers think it will be more difficult to sell their home this year, according to the study from the Bank of Scotland.

Overall 43% say they will consider improving their current home instead of moving as they are worried about the economy, the size of the deposit they’ll need and a shortage of family friendly properties.

Second Steppers are mostly couples and young families moving on from their first time buyer flats to secure more space and a garden. The latest figures show a lack of confidence about selling among this group, despite a strong equity position and significant improvements to market conditions over the past few years.

The research reveals that today’s typical second steppers bought their first property when the average price was £120,664. Based on the latest house price figures, selling their home now for the average first time buyer price of £139,284 would provide them with an average equity of £48,738.

This average equity of £48,738 is equivalent to roughly 20% of the average price of a typical detached home at £253,944.

The report also found that the typical gap between the sale price of a second steppers first home and the cost of their desired next property is £114,659. However, the average equity level of £48,738 from the sale of their first home can help to reduce this gap by 43%, meaning that Second Steppers need to find an extra £65,922 by adding more to their existing mortgage or raise the funds from elsewhere.

In addition, they are keen to ensure they secure that dream home with 41% of new and growing families say that the biggest issue in delaying their move is that they haven’t found the right property. This is considerably higher than in the rest of the UK where this was the reason in only 26% of cases.

Meanwhile, 31% believe the market conditions for second steppers has improved compared to last year and 40% feel there are now more first time buyers in the market.

‘Second steppers are the link between first time buyers and the rest of the housing ladder. They are living in the homes that the first time buyers need to buy so it’s vital that this part of the market keeps moving,’ said Graham Blair, Bank of Scotland mortgages director.

‘Whilst Second Steppers are telling us that challenges remain as they try to bridge the gap and find that dream home, market conditions have improved significantly in the past few years and are likely to remain, which should enable more Second Steppers to make the next move,’ he added.

The research also reveals that 40% want a new build for their next property purchase while 33% want a period property. This is in contrast to the rest of the UK where both period properties and new builds are favoured by just over a third of second steppers. Some 25% want to move to a recently developed or renovated property, while just 14% are willing to do the hard work themselves and are seeking a renovation project, compared to 21% across the rest of the UK.

The must have features topping the list for the next property are led by 60% wanting a driveway or off-road parking, 57% a garden and 54% a kitchen diner. Over half, 52% want to live in a town while 40% prefer a quieter village life. Less than a quarter, 23%, are looking to be city dwellers and 29% are looking to move to the countryside.