When building and selling homes it's critical to ask: Who is my target market? Identifying the target market helps inform decisions about the types of homes to build, the schemes to offer, and the focus of marketing campaigns. While not all buyers fit into neat categories, examining key market segments provides invaluable insights. In this blog post we’re going to look at a diverse middle group, the second steppers.
Who are second steppers?
Traditionally, “second steppers” referred to couples moving to a larger home as they started a family. However, this definition no longer reflects the full picture. Today, it includes a broader group of homeowners, anyone who has taken the first step onto the property ladder and is now ready to move up. We’ll look at all those who have already bought their first home, but are still reliant on the mortgage market.
In 2023-4 there were 331,000 households moving within the owner-occupier tenure, just under half of which are owners with mortgages. Notably, 62% of 16–34-year-olds are now owner-occupiers, up from 45% a decade ago, thanks in part to schemes like Help to Buy. This success means that whilst more in 2003/4 there were 2.4 second-step mortgages for every first-time buyer; today, it’s just 0.9.
Financial hurdles
The main financial challenge for second-steppers is boosting what they can afford, typically through increased value of their existing home, saving money, and increased salaries.
The increased value of a home increases the homeowners equity and is largely dependent on the market. When it’s slow it can take longer to grow equity, but rapid growth can also put that second step out of reach. In 2004, it took just 2.2 years for a first-time buyer to build 25% equity; by 2025, it takes 7.8 years on average.
Despite this, many second steppers are in a strong financial position. Zoopla estimated that the average second stepper household would need an income of £72,600 to buy the average UK home with a 35% deposit. Two average earners aged 30–59 would typically earn around £77,270 after tax, suggesting that many should be in the position to make the move.
Additional costs like Stamp Duty, conveyancing, and repairs can also be a barrier, and 55% of second steppers report that they come across unforeseen costs when moving. Yet, 51% say they’d prefer a faster process over a cheaper one, suggesting many are prepared to absorb these costs.
The advantages
Second steppers have been squeezed by some of the same market trends as First Time Buyers, but in reality once having gained the ladder they’re in a positive position. Especially as the costs of mortgages are consistently lower than costs of rent for the same property type, and owner occupier households are most likely to have savings. Second steppers also do have access to some schemes that can make moving easier, particularly Part Exchange and Assisted Move.
With Part Exchange, buyers trade in their current home when purchasing a new build, avoiding the hassle of selling. Assisted Move works similarly, but the buyer is more involved in the process of selling their existing home, still benefitting from the developer’s expert help. In both cases a lot of the issues that come with making the second step can be avoided, such as estate agency fees and repairs.
Second steppers are a key part of the market, easily overlooked when First Time Buyers grab the headlines. The market can still make affordability challenging, but they are generally secure and looking for an easy and achievable route. Developers that highlight the options of Part Exchange and Assisted Move can appeal particularly to those who are juggling the busy stages of family life alongside their search for a larger home.
If you’re a housebuilder interested in offering Part Exchange and Assisted Move on your development, get in touch with experts at The PX Hub.
Sources:
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GOV.UK – English Housing Survey 2023 to 2024: Headline findings on demographics and household resilience
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Financial Reporter – Unexpected costs hampering transactions for two thirds of homebuyers
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The I Paper – The areas of the UK where it's hardest to climb the housing ladder, mapped
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The Guardian – Meet the young families stuck in their starter homes thanks to the UK housing crisis
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Zoopla – What income do you need to buy a home in 2024?
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Starling Bank – ‘Money dysmorphia’: what you earn versus how you feel
