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Now "second Steppers" Finding It Harder To Move And Buy Than Ftb'ers


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On Radio 5 early this morning, I heard them discussing the story in connection with the following article.

They also interviewed a lady who said she was fairly typical of many in her age group, who thought, (as a young couple), that they had acted sensible by being careful with their money, and saving for a deposit, so they could enter the property ladder, "as are advised to do", she said.

She explained how they bought a 2 bed flat at the height of the boom in 2007. They had saved 10% to put down, and they could easily manage the mortgage as their salaries increased, so they saved in anticipation of moving to a 3 bed semi to start a family.

However, after recently enquiring about a mortgage, she said. they find themselves trapped in the flat because the value of the flat has gone down so much, that even with their savings and higher wages, that will still not be enough to be able to afford the next step up.

She said, that if only she had not bought back in 2007,and had rented instead, then they would of been able easily to buy that 3 bed place now. Some "ladder", it was for them.

I can see this becoming an even bigger problem for the housing market than FTB'ers now.

It is not only the reckless that have become victims of this whole damn ponzi scheme. :angry:

Thousands of young families are trapped on first rung of the housing ladder

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2106298/Thousands-young-families-trapped-rung-housing-ladder.html#ixzz1nOYCYvNG

Thousands of young families are trapped in their first homes because they cannot afford to move up the housing ladder.

Two-thirds of those who are looking for a bigger home have been unable to make the move they want for at least 12 months, research shows.

A combination of factors, including a lack of affordable property, high deposits on mortgages and a shortage of buyers, are leaving these couples stuck in limbo – and paralysing the rest of the housing market.

The research, by Lloyds TSB, found one in five of these ‘second steppers’ believe it is harder to move up the property ladder than to get on it in the first place.

And 43 per cent believe finding and financing a second home is just as difficult as buying their first.

The average price of a ‘second stepper’ home is some 5.2 times gross household salary.

For first time buyers, the ratio is 4.1.

The average price of a ‘second stepper’ home is some 5.2 times gross household salary.

For first time buyers, the ratio is 4.1.

Stephen Noakes, the mortgage director for Lloyds TSB, said: ‘It is vital that this group of home movers receive more support and attention as they play an intrinsic role in getting the housing market moving again.

‘If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill, and this bottleneck will not only restrict the supply of starter properties but will have a knock-on effect across the whole of the housing market.’

One in three of those looking to buy their second home said the main barrier was either a lack of affordable property or a shortage of buyers for their home.

And 71 per cent said the deposit needed for their second property was too high. The average deposit for a typical ‘second stepper’ is £60,670, more than double the average figure of £24,783 that was required ten years ago.

Many in this group will struggle to find the cash as they bought their first property at the height of the market in 2007, so have very little equity in their homes.

The high cost of moving is also a factor, the research found. It cost £8,922 to move house in 2011, an increase of 69 per cent compared to 2001, when it cost £3,632.

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I suspect that part of the reason is that the boom was to a large extent a flat-building (and converting) boom. Old hotels were being bought up and converted into one- and two-bedroom flats, tower blocks were going up etc. ... but there were nothing like as many houses being built. Added to that the growing number of horror stories about leasehold charges and rogue ground landlords, and it seems obvious to me why flats have taken the brunt of the post-2007 mini-HPC.

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Non-story: housing costs are challenging to nearly everyone, as aspirations have risen.

The high cost of moving is also a factor, the research found. It cost £8,922 to move house in 2011, an increase of 69 per cent compared to 2001, when it cost £3,632.

Interesting arithmetic, too ....

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I see they mention the cost of moving is too high, but really fail to address the real issue; that property prices have been inflated by a lack of credit control

- i.e. LIAR LOANS -

and are being propped up by low interest rates, no repossession, tax breaks for BTL and high housing benefit payments. All back up by a constant campaign by the media; HPI good, HPI good, HPI good.

Modified for acuracy.

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Non-story: housing costs are challenging to nearly everyone, as aspirations have risen.

The high cost of moving is also a factor, the research found. It cost £8,922 to move house in 2011, an increase of 69 per cent compared to 2001, when it cost £3,632.

Interesting arithmetic, too ....

Well spotted. 3632 is 40.71% of 8922; call it 41%, then 41+69 = 100 ...

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Added to that the growing number of horror stories about leasehold charges and rogue ground landlords, and it seems obvious to me why flats have taken the brunt of the post-2007 mini-HPC.

Growing number?

Horror stories about freeholders are surely a pale shadow of their former self, back in the days of unlimited liability and no recourse! Today's major problem with flats is widespread poor quality, combined with rising aspirations.

Yes, many governments (of both parties) have tried to legislate to protect ordinary people, and the long-established landowners - being more powerful than elected governments - have repeatedly scuppered legislation. 1985 must've been a nadir for flats, as many more-or-less honest freeholders sold up to the real mafia ahead of the "right of first refusal" to leaseholders. The 1985 act tried to protect leaseholders, but left loopholes suitable for any landowner who is One Of Us[tm].

Didn't the Major government in the 1990s drive a wedge through unlimited liability, by enabling leaseholders acting together to buy up a freehold? Sure, there's still scope for abuse, but take it too far and there is at least a fallback!

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So many people expect to be able to make bad financial decision after bad financial decision and still have everything they want. If in 2007 they promised to pay a bank three times their joint gross salary (plus interest) for a small flat, they should not be surprised that five years later they don't have enough money to buy something bigger.

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They also interviewed a lady who said she was fairly typical of many in her age group, who thought, (as a young couple), that they had acted sensible by being careful with their money, and saving for a deposit, so they could enter the property ladder, "as are advised to do", she said.

I can see this becoming an even bigger problem for the housing market than FTB'ers now.

No problem for me. I'm glad they're stuck.

Advised by Gordon and Krusty and their parents and all the other property only goes up brain deads? .

It all sounds good for those who were capable of independent thought and who refused to pay the prices these FTBs chose to buy at. Those trade up homes will have to be reduced further in price, whilst the boom FTBs remain trapped. Less competition for second step type homes and lower prices, for those who are positioned themselves for that opportunity.

I see they mention the cost of moving is too high, but really fail to address the real issue; that property prices have been inflated by a lack of credit control

And willing buyers including many FTBs who were happy to pay the ever higher asking prices.

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I see they mention the cost of moving is too high, but really fail to address the real issue; that property prices have been inflated by a lack of credit control and are being propped up by low interest rates, no repossession, tax breaks for BTL and high housing benefit payments. All back up by a constant campaign by the media; HPI good, HPI good, HPI good.

Exactly.....the prices have reached as high as they can get, with interest rates now as low as they can get.....wages are not going anywhere fast, if purchased in the last 7 or 8 years the equity is much the same if not lower depending on location, supply and demand of property selling.....more debt is therefore required plus costs if moving up to a more desirable home...if starting a family expect a drop in income when you can least afford it.....the story of HPI in one easy lesson.....not easy for today's buyers....having said that what is wrong with having a family in a two bed flat? ;)

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No problem for me. I'm glad they're stuck.

Advised by Gordon and Krusty and their parents and all the other property only goes up brain deads? .

It all sounds good for those who were capable of independent thought and who refused to pay the prices these FTBs chose to buy at. Those trade up homes will have to be reduced further in price, whilst the boom FTBs remain trapped. Less competition for second step type homes and lower prices, for those who are positioned themselves for that opportunity.

And willing buyers including many FTBs who were happy to pay the ever higher asking prices.

+1

And average age of first time buyer is now in their 30's. So who in their right mind buys the overpriced first time property, when by that age you want the second step. FTBers are stuck with negative equity and in a house they no longer want to be in. It's been heading this way for years.

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No problem for me. I'm glad they're stuck.

Advised by Gordon and Krusty and their parents and all the other property only goes up brain deads? .

It all sounds good for those who were capable of independent thought and who refused to pay the prices these FTBs chose to buy at. Those trade up homes will have to be reduced further in price, whilst the boom FTBs remain trapped. Less competition for second step type homes and lower prices, for those who are positioned themselves for that opportunity.

And willing buyers including many FTBs who were happy to pay the ever higher asking prices.

Whilst you may be correct; there is an elephant int the room. Although 2nd time buyers may need to reduce to sell, this requires the next step up to drop to complete the chain.

Empirically I can tell you this isn't happening. There's a difference between dropping 10k of your 110k house and 20k off your 200k house especially if it's your inheritance. In my (albeit limited) experience boomers and their offspring are still holding out for top dollar.

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Forget about recent buyers, I know people who bough 15 years ago and are now mortgage free who can't afford to buy a bigger place. It's amazing how little incremental space you get for doubling the price in most parts of the UK.

A huge +1 to that.

We bought in 1999 (1/2 bed maisonette), then moved up to 2 bed terrace in 2001. To get a 3 bed semi in a similar area is now £75-100k extra. Often that only buys you an extra 100 square foot, if that. Madness.

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Whilst you may be correct; there is an elephant int the room. Although 2nd time buyers may need to reduce to sell, this requires the next step up to drop to complete the chain.

Empirically I can tell you this isn't happening. There's a difference between dropping 10k of your 110k house and 20k off your 200k house especially if it's your inheritance. In my (albeit limited) experience boomers and their offspring are still holding out for top dollar.

Doing very well aren't they?

I know an old couple that put their 5 bed house on the market for £380k in 2008. They told me they had seen a nice 2 bed bungalow though there was no interest yet in their house and they weren't going to drop the price.

Their house is still for sale at £380k. They don't realise that even if they ever get their £380k the pounds they get are going to be worth so much less. They have been losing 5% a year on the purchasing power of the balance between their sale and purchase price. They may as well have dropped the price, had lower heating, council tax etc for 4 years and put the money in the bank where it was at least still earning something.

I wonder at what figure it was more viable to sell at?

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