Over 95 per cent of towns too expensive for new families to move up property ladder

Homeowners in over 9 out of 10 UK towns face 50% mortgage increase or more to move up. Growing families at centre of a property stalemate. Moving up from starter home to family home is hardest in East Kilbride.

Nottingham, UK, 10 August 2015 – The UK housing market is at risk of a stalemate as growing families in most parts of the country face unaffordable hikes to their mortgage if they want to move up the property ladder.

Having previously highlighted the problems first time buyers experience, Experian now reveals the difficulties of trading up.

In 265 of 276 UK towns, moving up the property ladder from a starter home to a larger family home, can be as challenging as getting a first foot on the ladder. New data has revealed that the difference in the average cost of a one or two bedroom home compared to a three to four bedroom property is 50% or more in 96% of UK towns. The average price difference across the UK is 42%, leaving homeowners needing to find an extra £70,000 on average to move up.

Experian’s analysis also shows that in over half of the UK’s towns and cities the current average family income would not even be enough to secure a mortgage on a one or two bedroom property. The same is true in over two thirds of the UK’s postal districts.

Jonathan Westley, Managing Director of Experian’s Consumer Information Services UK&I, said: “The current housing squeeze is not only impacting on first-time buyers, but also second-time buyers; often people who have growing families and need more space. For families in some locations this can mean a choice between staying put or moving to another area in order to move up.

“Getting that first foot on the ladder is an important step, but moving on to a larger home can be as challenging, particularly given the shortage of housing in some areas and the increased focus on affordability  in mortgage lending rules. At Experian we try to help people get in shape financially so their credit report helps put them in a good position to secure a mortgage they can afford in order to move up, and at the best rates.”

Through this new property insight and advice, Experian is aiming to help people navigate the mortgage process and ensure they’re in good financial shape to be able to move home.

Central Scotland and the South East the most difficult regions

The property gap is widest in Scotland’s central belt, particularly around Glasgow, with the cost of a larger property at least double that of a one or two bedroom home in five locations – East Kilbride (123% more), Clydebank (122%), Paisley (114%), Greenock (109%) and Hamilton (100%).

Experian’s analysis also revealed that overall these towns are among the least affluent in the UK. Here local populations are dominated by people on lower incomes, some homeowners and some renting homes, alongside pockets of more affluent commuting families. For example, 25% of working people in East Kilbride work in Glasgow, as does 32% of the working population in Clydebank and 31% in Paisley.

Paul Russell, Director of Analytics at Experian’s Decision Analytics, comments: “The prices we see for larger properties in these areas may be inflated by a population of relatively affluent Glasgow commuting families. This will have the effect of driving up demand and prices for larger homes, while the stock of smaller homes is not subject to the same levels of demand, keeping prices lower. For those families in smaller homes wishing to move up in these areas, the cost may well be prohibitive.”

Outside of Scotland, other surprising hotspots were Burnley and Abergavenny, where the cost of moving up is at least double, most likely driven by a lack of modern high quality one or two bedroom houses. Homeowners in South East commuting towns, which are dominated by affluent professional families, also face similar challenges to those in Scotland. People living in Farnham, High Wycombe, Tunbridge Wells, Horsham and Bishops Stortford all face having to increase their borrowing to fund an additional 90% or more on the value of their existing home to move up to a three or four bedroom home.

Top ten towns with the highest per cent property price difference (excluding central London)

Town

Avg 1/2 Bed Cost

Avg 3/4 Bed Cost

Difference ( £)

Difference (%)

  1. East Kilbride

£72,687

£161,886

£89,199

123%

  1. Clydebank

£77,535

£172,051

£94,516

122%

  1. Paisley

£66,859

£142,865

£76,006

114%

  1. Burnley

£64,654

£136,912

£72,257

112%

  1. Greenock

£76,585

£159,803

£83,217

109%

  1. Hamilton

£71,915

£143,913

£71,998

100%

  1. Abergavenny

£96,992

£193,704

£96,712

100%

  1. Farnham

£225,865

£445,731

£219,866

97%

  1. Falkirk

£65,013

£126,800

£61,787

95%

  1. High Wycombe

£223,655

£434,384

£210,729

94%

However, in some parts of the country, regeneration and the building of smart city centre flats for affluent city workers has created a skew in house prices. In these areas, the average cost of three or four bedroom homes is as little as a quarter more than a one or two bedroom property. This is the case in central Manchester where a two or three bedroom home is just 25% more, Cheapside in London (26% more), and Stratford (28% more) with high numbers of flats developed for the Olympics and now populated with young professional singles and home-sharers. In some specific postal districts, for example in Leeds and Middlesbrough, older larger properties are cheaper than newer smaller homes as regeneration spreads.

Other highlights from Experian’s research show:

  • The Y026 postal district, a cluster of villages north west of York, tops the table for the largest percentage difference between a smaller home and a family home at 256%, equivalent to around £275,000. This is followed by the GU3 postal district between Aldershot and Guildford (223% difference), East Kilbride (G73), Holmes Chapel (CW4), and south west of Bishops Stortford (SG10).
  • The top 75 postal districts in terms of actual price difference between one/two and three/four bedroom properties are all in London.  The first non-London postal district to appear is HA6, the Northwood area once used for filming TV sitcom The Good Life, where the price differential is £465,000.
  • Postal district OX18 around Burford is the first outside of the South East to appear in the list of those with the greatest price differential.

Mortgage guide – our suggestions for those struggling to move up

Experian’s guides to help people through accessing credit, and provide pointers to those looking to secure a mortgage deal can be found at www.experian.co.uk/improve. Highlights include:

  • Show lenders you can manage your finances with your current mortgage – cut back on discretionary spending so you end each month with a surplus
  • Ensure your credit report is healthy – make sure you’re correctly registered on the electoral roll and pay off more than the minimum repayments on your current mortgage each month
  • Be careful how much credit you apply for six months before approaching a lender for a mortgage – a flurry of credit card applications may worry mortgage lenders

-ENDS- 

Contact:

Sarah Muir/Edward Keough

Lansons

020 7490 8828

sarahm@lansons.com /edwardk@lansons.com

About the research

House price data was sourced from Rightmove and the prices of average one and two bedroom homes and three and four bedroom homes were then analysed across 275 town territories and 2,787 postal districts. Based on town and postal district, Experian used its Mosaic people classification and Affluence model to understand who lives in these areas and the affluence levels of each location.

About Experian

We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft.  In 2014, we were named by Forbes magazine as one of the ‘World’s Most Innovative Companies’.

We employ approximately 17,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2015, was US$4.8 billion.

To find out more about our company, please visit http://www.experianplc.com or watch our documentary, ‘Inside Experian’.