Homemovers are benefitting from rising house prices13th January 2014

Rising house prices have given homemovers a higher level of deposit for their next property, according to the latest Lloyds Bank Homemovers Review, as 337,500 people have moved up the housing ladder in 2013.

• The average deposit put down by a homemover in 2013 was £76,398, rising by 6 per cent in the past year.
• Homemovers in London put down the largest average deposit, at 34 per cent of the average property value, which equates to £144,505.
• 2013 has seen the second successive annual increase in homemover house purchases.
• There were an estimated 337,500 homemovers in 2013 – a rise of 3 per cent.

With house prices rising by 7.5 per cent1 in 2013, homemovers are benefitting from more equity and bigger deposits on their next house purchase. The average deposit put down by a homemover in 2013 now stands at £76,398, which is an increase of 6 per cent since 2012, from just under £72,000.

The average deposit of £76,398 equates to 33 per cent of the average price paid by homemovers for their next property, and the average mortgage advance for a new homemover is £154,150; 41 per cent higher than a decade ago (£109,496). See Table 4.

Not surprisingly homemovers in the capital put down the largest average deposit - £144,505 - 34 per cent of the average property value. This is close to four times the average deposit put down by homemovers in Northern Ireland (£36,951 – the lowest).

The past year has seen the second successive annual increase in the number of homemovers (those purchasing with a mortgage who already own a property), with a rise of 3 per cent from 2012 (326,600). Two years ago in 2011, there were 315,600 homemover house purchases, 21,900 fewer than in 2013. Whilst this number has been growing in the past two years it is still 55 per cent lower than the annual average between 2003 and 2007 (750,000).

Since 2008, the average price paid by a homemover has grown by 5 per cent from £220,587 to £230,549 in 2013. Nationally, homemover property prices grew by 12 per cent in the past year. 

Marc Page, Lloyds Bank mortgages director, said: “As house prices have increased over the past 12 months, we’re seeing more people look to take the next step on the housing ladder. Higher levels of equity are increasing the average deposits, with this figure now at over £75,000, and this, in turn, is giving homemovers more options.

This year we’ll see Help to Buy enable more homeowners to progress to the next rung of the ladder, and as a result we would again expect the number of homemovers to increase in 2014.”

Second Stepper equity levels and affordability

Second Steppers are a subset of homemovers and refer only to those looking to get on the second rung of the housing ladder. Research shows that first time buyers typically stay in their first home for five years. Those Second Steppers that bought their first home five years ago in 2008, after the peak of the market are now, on average, estimated to have an equity level of £41,2864 - equivalent to 24 per cent of the average price of a typical Second Stepper home (£174,240).

The North-South divide in Second Stepper affordability continues to widen

There is considerable variation in housing affordability between regions, with northern regions more affordable than southern regions for Second Steppers. This is largely a reflection of the lower prices for Second Stepper properties in the north. The East Midlands (2.9), East Anglia (3.1) and the North (3.2) are the most affordable regions for those in their first home looking to take their next step on the property ladder. While London (6.0); South West (4.6) and South East (4.5) are the least affordable. These jaws of affordability have widened since the last homemover review, where the East Midlands had a ratio of 3.1 and London 5.7.