Taking on a property investment project is now much cheaper than it would have been a couple of years ago, according to new data. Research from Lloyds TSB has shown home affordability in the UK is improving, meaning ownership is now in the sights of a wider number of people. Since 2008, the average price paid for a property by a second-stepper has fallen by ten per cent from GBP 235,078 to GBP 212,586.
However, it isn't all good news for investors, as the average deposit put down for a property in the UK has increased. With home mover house prices increasing three per cent in the past year, the deposit paid by buyers is now GBP 70,540. While this is just six per cent higher than a decade ago, in areas like London this is causing problems. In the capital, the average deposit is GBP 126,528 or 34 per cent of the average property value. Conversely, the average deposit is just GBP 36,912 in Northern Ireland - the lowest in the UK.
This means it may be harder for budding landlords to get their hands on property generally considered to be for second steppers. Unsurprisingly, residential buyers are now having to put off moving to their second home until they are 40. This has increased by three years since 2002, with the greatest rise occurring since 2007.
When it comes to affordability, second-step property is 4.4 times gross annual average earnings as of July, compared to 4.9 in June. This means most are now in a better position to put down a deposit on a home.
Nitesh Patel, housing economist at Lloyds TSB, said: "Housing affordability for the typical second stepper has improved in the past year. Nonetheless, there are many potential second steppers who are still in their first home which they bought in the run up to and at the peak in house prices in 2007. Many of these home owners may still be unable to move due to having either very low, or negative, equity in their homes."
- Wednesday 04 September 2013