Summary: Now is the time to move up the property ladder. There are savings to be made as house prices tumble. You may lose on the sale price but make up for it on your purchase.

Climb the property ladder – two steps at a time

One estate agent says that the saving on a larger property is the main reason to sell just now. He explains, “If a 500,000 pound flat has come down by 30 per cent, then that is less of a drop in real terms than that on a one million pound house.”

Another agent describes the market as ‘the reverse scenario of where we were two years ago, as anybody moving up the ladder has a narrower gap between properties'.

Property prices peaked in the last year or two but have now lost an average of 20 to 30 per cent, although some types of property in certain areas will always do better or worse than others.

Lower cost properties can often suffer the greatest loss of value as mortgage finance becomes more difficult to find for buyers in that market.

The property search website Propertyfinder.com has issued statistics which show that a year ago, trading up from a one-bed to a two-bed property, you would have had to find an extra 41,500 pounds, whereas now you need only 31,000 pounds extra. This is because of a 12 per cent drop in the average price of a two-bedroom home to 160,000 pounds. A one-bedroom home costs 129,874 pounds, a fall of eight per cent.

Getting that extra fourth bedroom may not be quite as affordable as the price of three-bedroom homes is falling faster than that of four. A four-bedroom home has dropped 20,000 pounds, from 390,343 to 370,276 pounds. But the cost of three-bedroom homes is falling faster, so the cost of moving up from three to four beds has gone up from 141,733 pounds in 2007 to 151,235 pounds in 2008.

More and more vendors are not so worried about dropping the guide price on their property if they can make a decent saving on the purchase of their new place. Some would even sell for less than they paid for it in the last couple of years, as long as the price of the new property represented a bigger saving.

One estate agent confirmed that, saying, “For some people, the properties they could not afford two years ago are now looking affordable, even if they sell their existing home at a loss.”

Some buyers are able to take advantage of the market to jump more than one rung at a time on the property ladder. For example, if they sold a one-bedroom flat at the peak of the market they might have moved up to a three-bedroom house, rather than into a two-bedroom semi which might have been the expected next step.

Moving area can also mean more savings in the housing market. Some parts of south London such as Wandsworth, Battersea and Clapham had seen the value of property soar, but with a substantial drop in prices recently there are bargains to be had.

It is a buyer's market, and if you want to move up to a bigger and better property our advice is to find the one you like and can afford, and then sell your own home. In the current climate you should see a good saving on the deal.