Trade up gap hits record of £68,000 for buyers needing space
- Home movers are having to pay almost £68,000 on average to move from a two bed flat to a three bed house outside London, £4,000 more than this time last year
- Asking prices of two bed flats have increased by 15% over the past five years, while three bed houses have jumped by 20%, leading to the record trade up gap
- The smallest jump from a two bed to a three bed is in Swansea where the difference is £11,000 on average, and the biggest jump is in Esher, where there is a £300,000 difference
- The trade up gap increases to over £183,000 for those trying to make the jump from a three bed house to a four bed house, up from £180,000 last year
The trade up gap for second-time buyers has grown to a record £67,761, as the need for space drives up prices in the three bedroom home sector.
The study, out today from the UK’s biggest property website Rightmove, is based on analysis of the average asking prices of almost three million properties.
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, 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.
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.”
Trade up gap
|Region||Two bed flat||Three bed home||Two to three bed trade up gap||Four bed home||
Three to four bed trade up gap
|East of England||£228,133||£331,125||£102,992||£510,470||£179,345|
|Yorkshire & Humber||£139,177||£178,436||£39,259||£323,745||£145,309|
|London (excl. prime)||£486,464||£565,576||£79,112||£904,396||£338,820|