There has been much discussion about the struggle faced by today’s first-time buyers attempting to make their way on to the housing ladder.
But just in front of them is another arguably more troubled group of homeowners: the ‘second-steppers’ struggling to shift their first properties in favour of larger ‘forever’ homes.
And there is one key reason why second-steppers have struggled in recent years.
The majority of first-time buyers in the UK own flats – a sector of the market that is particularly depressed.
Their appeal has been significantly hampered by leasehold issues, rising service charges and cladding complications.
As the number of potential buyers has dwindled, so too has the value of these properties. UK house prices have increased by 43 per cent since 2016, but flats have increased by just 10 per cent over the same time period, according to Zoopla.
The result is that the average house costs 1.7 times as much as a flat – the widest gap for 30 years.
Tom, 40, recently upsized from a two-bedroom flat in Brockley, south-east London, to a three-bedroom mews house nearby. However, the move came after a year of sales falling through, prompting him to declare that he ‘never wants to move again’.
‘Looking back, I didn’t realise how good I had it as a first-time buyer. This time we had to deal with endless forensic and unrealistic buyers unwilling to pull the trigger, whilst competing with dozens of bids to get the three-bed Victorian terrace we (and it seemed, everyone else) wanted.’
The majority of first-time buyers in the UK own flats – a sector of the market that is depressed
Hayley Minn is trying to move out of London but has spent a year struggling to sell her two-bed flat in Greenwich
Second-steppers’ woes include the fact they may be competing with downsizers who often have more buying power – or older first-time buyers leapfrogging straight to a small house.
But the gap between what they can sell for and what they can afford for their next home is being stretched by higher mortgage rates and moving costs such as stamp duty.
Wanting to stay in the area he already knows and loves, Tom’s solution was to compromise on the style of home. Other struggling second-steppers may choose to reconsider the location in a bid to break the deadlock.
Research by Savills has identified the areas where it is hardest to bridge the average price gap between two-bed flats and three-bed houses, which is widest in London at £232,319, the difference between £482,035 and £716,354.
In the South East, this gap equates to £131,869, dropping to £97,638 in the South West, £80,003 in the North West and between £70,000 and £78,000 across the Midlands.
It’s the smallest in the North East, at £65,236, with a three-bed house averaging £178,404.
‘Mortgage rates remain elevated, making it challenging for households looking to upsize – particularly in London and the South East,’ says Lucian Cook, head of residential research at Savills.
‘That said, there are pockets of opportunity emerging across the country for those looking to trade up – although this may require buyers to look further afield.’
Hayley, 34, is trying to move out of London but has spent a year struggling to sell her two-bed flat in Greenwich. Purchased three years ago, it was the first home that she and her husband bought together. Now wanting to start a family, they plan to head further out of the capital.
‘We really want to move to St Albans, near to our parents, but homes move a lot faster there, and there’s no point in us trying to compete until we have a buyer on our flat,’ says Hayley, a journalist.
Three-bed houses in the Hertfordshire city cost between £700,000 and £750,000 – a significant jump from the £450,000 to £460,000 they are hoping to sell for.
‘We’ve changed estate agents twice and reduced the price, but there are a lot of similar flats for sale around us, and it seems no one wants to buy in London. We are stuck.’
She has spruced up the property in an effort to attract buyers. ‘Even modest improvements – fresh decor, a refreshed kitchen or bathroom, or improving the balcony – can help speed up the sale,’ says Chris Husson Martin, director of sales at Hamptons.
Sam Hoare and wife Victoria leapfrogged the flat-buying stage and have gone straight to a bigger property in Kent
He says they are seeing more second-steppers think creatively about location and property type. ‘Many are widening their search to areas that offer better value, even if it slightly lengthens the commute, in exchange for more space or better long‑term potential.’
Some buyers are skipping the flat-buying stage and going straight to a bigger property. The average age of the first-time buyer in England is now 34, when thoughts may be turning to starting a family.
One homeowner leapfrogging the first step to save both money and stress is Sam Hoare who, with his wife Victoria, recently purchased a three-bed, new-build house in Newington, near Sittingbourne in Kent, after renting for four-and-a-half years in Bexley and Sidcup, south-east London. Prices in the area start from £425,000.
‘We saved up while living squashed in a one-bedroom house,’ says Sam, 32, a football coach. The birth of Eliott eight months ago forced the move, with the couple taking advantage of Fernham Homes’ 5 per cent ‘Deposit Paid’ contribution for buyers.
‘I have a longer commute to work but it’s beyond worth it,’ adds Sam. ‘We feel sorted now, we can plan for the future, including schools, and I’m sure we’ll own this house for ever.’
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