Rising house prices provide existing home owners with moving boost

With house prices rising by 7.5%1 in 2013 home movers are benefitting from more equity and bigger deposits on their next house purchase, research from Lloyds has revealed.

The average deposit put down by a home mover in 2013 now stands at £76,398, which is an increase of 6% since 2012, from just under £72,000.

The average deposit of £76,398 equates to 33% of the average price paid by home movers for their next property, and the average mortgage advance for a new home mover is £154,150; 41% higher than a decade ago (£109,496).

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

The past year has seen the second successive annual increase in the number of home movers (those purchasing with a mortgage who already own a property), with a rise of 3% from 2012 (326,600).

Two years ago in 2011, there were 315,600 home mover house purchases, 21,900 fewer than in 2013. Whilst this number has been growing in the past two years it is still 55% lower than the annual average between 2003 and 2007 (750,000).

Since 2008, the average price paid by a home mover has grown by 5%2 from £220,587 to £230,549 in 2013. Nationally, home mover property prices grew by 12%2 in the past year.

Marc Page, mortgages director of Lloyds Bank, said: “As house prices have increased over the last 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 home movers 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 home movers to increase in 2014.”

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% of the average price of a typical Second Stepper home5 (£174,240).

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.

Peter Lawrence at Lawrence Rand said: “Increasing property values are improving the equity stakes of existing home owners which, as this report demonstrates, provides greater potential for moving based on an improved ability to borrow.

Existing home owners are recommended to get an up to date appraisal of their home and seek professional mortgage advice as part of planning any potential move.

Naturally we will be pleased to assist.”