The demand for bigger homes, fuelled by the ongoing pandemic, is making the leap from a two-bed flat to a three-bed house even more expensive for the UK's frustrated army of second-steppers.
Newly released data from Rightmove, based on analysis of the average asking prices of almost three million properties, reveals that 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% nationally compared to 2015, compared to a 15% jump for two-bedroom flats. Over the past year, two-bedroom flats are up 3% to £171,751 and three-bedroom homes are up 4% to £239,512 on average.
In the East of England, the two to three bed trade up gap is now over £100,000 for the first time, while the biggest trade up gap is in the South East, at £121,295.
Analysis for London (excluding prime London to remove luxury flats) 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% for three-bedroom homes compared to 2015, compared to an uplift of only 5% for two-bedroom flats. Over the past year, two-bedroom flats are up 2% and three-bedroom homes are up 4% 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 by 15% over the past five years.
In London, the average asking price growth for four-bed homes has grown by 10% 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.
Tim Bannister, Rightmove’s Director of Property Data, 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.”