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Challenges Facing Property Second Steppers

A new report from Bank of Scotland has revealed that first-time sellers looking to take their second step on the property ladder need to find an extra £114,659. 

The bank’s Second Stepper report tracks the challenges faced by first-time sellers, and found that 50% of Second Steppers believe it will be more difficult to sell their home this year, with worries over the economy, the size of the deposit they’ll need and shortage of family-friendly properties.

On a more positive note, strong house price growth has helped those still living in their first homes gain a healthy equity windfall. 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 (£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.

“Second Steppers are the link between first-time buyers and the rest of the housing ladder,” commented Graham Blair, Bank of Scotland mortgages director. “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.”

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