London families struggle to upgrade
Three bed properties in London cost 463,799, a leap of £135,311 from two bed homes which cost 328,487.
The figures are distorted by certain postcodes in London, as in Kensington and Chelsea the difference between a two and three bed is £1,754,998, the most expensive difference in London.
Lucian Cook, director of residential research at Savills, said: “A lot of focus is placed on first-time buyers and their inability to access ownership without the Bank of Mum and Dad, but this shows there are also difficulties for people trying to buy a small family home.
“The difficulties are greatest in London, especially as they are more likely to get caught by higher rates of Stamp Duty.
“The Mortgage Market Review is also going to impinge on their ability to move due to tighter affordability, so a lot of them will need to make sacrifices such as staying in their small house longer or moving to cheaper parts of London or the commuter belt.”
Three years ago the additional cost of upgrading would have been under £100,000 across nearly half (47%) of London, yet in the first quarter of 2014 the £100,000 mark was surpassed in two-thirds of cases.
Three bedroom homes cost 24% more in Q1 2014 than Q1 2011, with prices rising from £375,004 to £463,799.
Comparatively two bedroom flats are 21% more expensive, rising from 271,218 to 328,487.
In nine London boroughs, including Barnet, Wandsworth, Islington and Tower Hamlets, the gap between two and three bed houses exceeds £200,000.
Newham is the cheapest area to upgrade, with the difference being £28,308.
Cook added: “I think some of these issues will apply to other parts of the country in light of the Mortgage Market Review – that might act as drag on house price growth going forward.
“To be in excess of £140,000 in Hounslow and Harrow suggests it’s a problem which is not just confined to prime market.”