Scottish homemovers face 'toughest market'

The bank said "second steppers" had been hit by falling house prices and eroding equity

Homeowners looking to take their second step on the property ladder are facing the toughest market conditions for more than a generation, a survey has found.

The latest Bank of Scotland Homemovers Review suggested homes were now less affordable for "second steppers" than for first-time buyers.

The average homemover deposit this year has been £46,804 - a four-fold rise from the average of £10,000 in 2002.

The bank said second steppers had been hit by eroding equity and house prices.

Their equity position now accounts for just 6% of the price of a typical second purchase, compared with 40% in 2007.

The bank said home affordability for second steppers was now similar to the 1990s, when weak house price growth through most of the decade adversely affected levels of equity.

This made it harder for the typical homebuyer to move up to the second rung of the housing ladder than it was for first-time buyers to enter the market during most of the decade.

'Serious implications'

Bank of Scotland housing economist Nitesh Patel said: "It is clearly very concerning that the challenges facing those attempting to take their second step on the housing ladder in Scotland are the toughest for more than a generation.

"This follows the significant decline in house prices over recent years and the subsequent erosion of equity among those who bought for the first time at close to the peak of the market."

She added: "The current problems facing second steppers have serious implications for the wider housing market, creating a bottleneck that significantly limits the number of homes available to first-time buyers as well as stopping many homeowners who need to move, possibly for family reasons, from doing so."