Nearly half of homemovers plan to downsize in next three years
Nearly half of those thinking of moving home within the next three years plan to downsize, according to new data provided by Lloyds Bank. Downsizing was cited as the single most popular factor for moving, as 46% plan to move to a smaller property with their next move.
The popularity of downsizing has grown in recent years, buoyed by the anticipated returns. Those thinking of downsizing could reap the financial rewards of trading down their property, as detached home owners could be in line for an average windfall of around £117,230 if they move to a semi-detached house.
One fifth downsizing earlier than planned
The figures show that average age for a downsizer is 53, at which point the greatest number (37%) of downsizers had lived in their home between 11 and 20 years.
The main reason people cite for downsizing is to move somewhere which better served their circumstances (53%). Other reasons include in order to reduce bills or free up equity (both 39%), or to provide extra cash for retirement (31%).
A fifth say that they are downsizing earlier than they had anticipated, citing reasons such as health, changes in relationship status and a need to be closer to better local amenities. A third also say that they are planning to move to a more affordable area.
Three quarters (72%) of those downsizing said they expected to profit from their move, with 35% saying that they planned to reinvest their additional capital in a new property. 29% said that they would invest in other financial products, whilst only one in five (21%) planned to invest in their pension or pass the earnings on to their family.
Mike Songer, Mortgage Director with Lloyds Bank, said: “People may consider moving home for a variety of reasons, often tied to their next big step in life – whether that’s getting married, starting a family or children growing up and flying the nest.
“We typically think of people moving to bigger houses as they move up the housing ladder, but people are increasingly looking to downsize their home because their circumstances or priorities have changed. Whilst financial gain may not be the main driver for those looking to trade down their property it is clearly a factor, with three quarters of downsizers expecting to profit from such a move.
“There are definitely financial benefits to be gained from trading down, with an average potential windfall of £117,230 when moving from a detached home to a semi-detached house. Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties which could be perfect for young families about to take their next step up the property ladder.”
Downsizing in London could raise over £200,000
Unsurprisingly, house prices in the capital mean that London homeowners could make the most from downsizing, as they stand to free up an average of £201,052 from trading down from a detached to a semi-detached home.
Downsizers from the South West saw the highest rise over the last 10 years in monetary terms in what they could gain from moving from a detached to a semi-detached home, with the average price difference increasing by 19% from £109,687 to £130,654.
For those trading down, the potential amount of cash homeowners could raise by downsizing their property from a detached home to a semi-detached stood at an average of £117,230 in 2015; an increase of 1% (£1,260) since 2005.