Second steppers 'finding it tough'

Homeowners trying to take their second step on the property ladder are still bearing the brunt of tough housing market conditions, a study has found.

The typical cost for a "second stepper" to trade up to their next home last year was around 4.6 times annual average earnings, significantly higher than the ratio of 2.9 times a decade ago, Lloyds TSB's home mover review said.

Trading up was slightly more affordable than in 2011, when this would cost around 5.4 times annual average earnings, the highest reading in a quarter of a century.

The South East is the least affordable UK region for second steppers, with an affordability ratio of 6.3, followed by London. Both the West and East Midlands are the most affordable, with ratios of 4.0.

The affordability ratio for second steppers to trade up is calculated as the average price of a typical second stepper home minus the second stepper's current equity position, as a ratio of average earnings.

Many would-be second steppers bought their first home at the top of the market, meaning they face a tough struggle moving up the property ladder and may find themselves in negative equity.

This also has a negative impact on struggling first-time buyers, who typically need a 20% deposit, as it gives them fewer potential homes to choose from.

Nitesh Patel, housing economist at Lloyds TSB, said: "Even though many of today's second steppers won't have bought at the height of the market, many are still going to struggle to make that move up the housing ladder.

"House prices have been falling, or flat, for the past four years and, as a result, many are still in a very low equity position.

"The difficulties faced by aspiring second steppers are having a considerable knock-on impact for potential first-time buyers due to the resulting shortage of properties available on the market with housing chains proving hard to establish."