The so-called ‘trade up gap’ for people buying for the second time has grown to a record £67,761 according to Rightmove.
The study is based on the average asking prices of almost three million properties, and operates on the basis of second home buyers already owning a two bedroom home and now wanting a three bedroom unit.
Over the past five years, the price growth of three bedroom houses has outstripped the price growth of two bedroom flats every year.
Outside London, asking prices for three bedroom homes are up 20 per cent nationally compared to 2015, compared to a 15% jump for two bedroom flats. Over the past year, two bedroom flats are up just three per cent to £171,751 and three bedroom homes are up four per cent to £239,512 on average.
Analysis for London – excluding prime London to remove luxury flats from the statistics – shows a trade up gap of £79,112, from an average of £486,464 for a two bed flat, to £565,576 for a three bed house.
Asking prices in the capital are up 15 per cent for three bedroom homes compared to 2015, compared to an uplift of only five per cent for two bedroom flats. Over the past year, two bedroom flats are up two per cent and three bedroom homes are up four per cent in London.
Those trying to move from a three to a four bed home, potentially for extra rooms to work from home, will need to contend with an even bigger jump of £183,093 outside London, with asking prices growing 15 per cent over the past five years.
In London, average asking price growth for four bed homes has grown by 10 per cent over the last five years, as this property type actually dropped in value between 2016 and 2018.
The trade up gap varies dramatically at a local level. In Swansea, a move from a two bedroom flat to a three bedroom home has a difference of only £11,000, whereas in Esher in Surrey there is a massive £300,000 difference.
Rightmove’s director of property data Tim Bannister, explains: “People who bought a smaller home five years ago and are now hoping to trade up will find it’s harder to afford the next rung of the ladder because of the different pace of the sectors.
“Those who really need the space and are struggling to trade up could widen their search area to find alternative places where they can get more for their money, or they may need to compromise on the type of home and opt for a terraced rather than detached.
“The cash jump is even bigger from three to four beds, likely due to four bed homes often having additional bathrooms, bigger gardens, garages or outbuildings, as well as an extra bedroom, but traditionally homeowners stay in their second home longer and so more people may have built up enough equity to make the jump to their forever home.”