Second steppers hit by deposit deficit as house price growth outpaces flats
Almost half (44%) of second time buyers have no plans to save for a deposit to buy their next home as they believe the equity in their current property will pay for their deposit
But the growth in house prices has outpaced flats over the last ten years potentially leaving buyers short when they look to move up the ladder – with the widest growth rates in Preston (16.5%), Colchester (10%) and York (9%)
With 62% of second steppers looking to buy a house, Uswitch.com is encouraging them to start saving now to avoid a falling into a deposit deficit
British homeowners are relying on rising prices to get off the first rung of the property ladder, but could face a significant shortfall as they seek to upgrade. Almost half (44%) of would-be movers don’t plan to save at all when buying a bigger home, according to new research from Uswitch.com, the price comparison site and switching service.
However, over the past decade, the British house prices (terraced, detached and semi-detached properties) have shot up by 21% while flats have increased by 15% over the same time period . With 62% of second-time buyers looking to trade up to a house and almost half not planning on saving, second steppers face a significant deposit deficit when they buy their next home.
The gap between the flat and house price growth rates is widest in Preston where it has grown to 16.5% over the last decade, followed by Colchester (10%) and York (9%). At the other end of the spectrum, flat owners in Aberdeen, Wolverhampton and Bradford have seen their property prices increase in price more than local houses – 10%, 3.5% and 1.7% respectively.
Uswitch.com research also showed more than six in ten (61%) second time buyers haven’t saved anything towards the big upfront costs such as stamp duty, surveying costs or removal costs which can amount to almost £12,000.
Tashema Jackson, money expert at Uswitch.com, says: “Second steppers have been lulled into a false sense of security by rising house prices. In some parts of the country houses have far outstripped flats and so if you are looking to move up the property ladder you need to carefully plot your next steps.
“Whatever your situation, plan ahead to find out what you can afford and how much you need to save. Don’t just take the first mortgage offered to you – consult a range of providers to find the best deal for you as this will help prevent paying over the odds.”
Five hardest areas to move up the housing ladder
| Area | Change in flat prices | |||||
|---|---|---|---|---|---|---|
| 2006 – 2016 | Change in house prices | |||||
| 2006 – 2016 | Difference in value change between flats and houses | |||||
| 2006 – 2016 | ||||||
| PRESTON, Lancashire | -8.01% | 8.51% | 16.52% | |||
| COLCHESTER, Essex | 12.97% | 23.04% | 10.07% | |||
| YORK, North Yorkshire | 14.84% | 23.51% | 8.67% | |||
| NOTTINGHAM, Nottinghamshire | 4.45% | 13.11% | 8.66% | |||
| BOURNEMOUTH, Dorset | 17.23% | 24.75% | 7.52% |
Source: Zoopla average house price data from April 2006 to April 2016
Five easiest areas to move up the housing ladder
| Area | Change in flat prices | |||||
|---|---|---|---|---|---|---|
| 2006 – 2016 | Change in house prices | |||||
| 2006 – 2016 | Difference in value change between flats and houses | |||||
| 2006 – 2016 | ||||||
| ABERDEEN, Aberdeenshire | 57.27% | 46.84% | -10.43% | |||
| WOLVERHAMPTON, West Midlands | 17.74% | 14.27% | -3.47% | |||
| BRADFORD, West Yorkshire | 7.71% | 6.01% | -1.70% | |||
| DUNDEE, Dundee | 28.53% | 27.60% | -0.93% | |||
| MILTON KEYNES, Buckinghamshire | 29.32% | 28.43% | -0.89% |
Source: Zoopla average house price data from April 2006 to April 2016
Find out how you could save over £1,000 a year with Uswitch here.
FOR MORE INFORMATION
Rory Stoves
Phone: 020 3872 5613
Email: rory.stoves@uswitch.com
Twitter: @UswitchPR
Notes to editors
All research referred to was conducted online by 3Gem between 17th May 2016 and 19th May 2016, among 2,000 UK homeowners living in their first property.
When asked “From the following statements, which one best applies to your plans to save money to move up the housing ladder?”, 43.5% said “I don’t plan to save at all, as I’m confident the equity built up in my current home will cover the deposit on my next property”.
Zoopla house price data 2016
Between April 2006 and April 2016, in Preston the price of flats dropped by 8.01% and the price of houses (detached, semi-detached and terraced) grew by 7.92% = difference of 15.93%. In Colchester, the price of flats grew by 12.97% and the price of houses grew by 22.07% = difference of 9.10% In York, the price of flats grew by 14.84% and the price of houses grew by 22.14% = 7.3% In Aberdeen, the price of flats grew by 57.27% and the price of houses grew by 46.31% = 10.96% In Wolverhampton, the price of flats grew by 17.74% and the price of houses grew by 13.54% = 4.2% In Milton Keynes, the price of flats grew by 29.32% and the price of houses grew by 27% = 2.33%
When asked “Thinking about your next home purchase, what type of property do you hope to buy and move in to?”, 39.2% said ‘Detached house’, 17.7% said ‘semi-detached house’, 5.7% said ‘terraced house’ and 26.7% said ‘Bungalow’.
When asked “Have you started saving anything towards the following home moving costs for your next property?”, on average 61% of respondents answered ‘No’ to stamp duty, surveying costs, solicitor’s fees, removal costs, estate agent fees, valuation fees, land register fees or mortgage arrangement fees.
Post Office Money and the Centre for Economics and Business Research (Cebr). http://www.telegraph.co.uk/news/shopping-and-consumer-news/11544146/Buying-a-house-You-will-need-an-extra-12000-just-to-move.html
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