43% of downsizers want a smaller property to help reduce bills and 37% believe downsizing will be a way to help support their retirement plans, Lloyds Bank has said.
The bank found that downsizing continues to be a strong driver of property sales, with 45% of homeowners planning to sell their property in the next three years saying they’d like to downsize.
37% of potential downsizers want to downsize to support their retirement plans and 43% said they wanted to reduce their bills and outgoings.
31% said they were looking to free up equity so they could re-invest in something other than property or a pension, while 12% wanted to invest in a pension and 18% said they would give money to their family. 29% of those considering downsizing are doing so earlier than they expected.
32% of downsizers are looking to move to a detached house and 26% to a semi-detached house, while 45% are looking to move to a bungalow.
The survey showed that the average age of those looking to downsize was 40 years old, with 26% of potential downsizers aged 26–35. 26% were aged 36–45 and 24% were made up of potential downsizers aged 46–55.
For those trading down early, the potential amount that can be raised by downsizing from a detached property to a bungalow has risen by 12% (or £10,221) over the past decade; a downsizer today would receive an average of £97,722, compared with £87,501 in 2003.
The potential amount of cash homeowners could raise by downsizing their property from a detached home to a semi detached would have earned an average of £116,474 in 2013; an increase of 13% (£13,910) since 2003.
Buyers downsizing from a detached home to a bungalow in the North saw the largest average increase of 35% (or £20,360), followed by the East Midlands and the North West, which both saw rises of 23% (£13,605 and £17,088 respectively) and the South East (20% or £27,026 – the largest rise in monetary terms).
Downsizers in the capital stand to make the most in monetary terms, with a downsizer in Greater London typically standing to make an average of almost £272,000 from trading down from a detached to a bungalow.
On the other hand, those moving from a detached home to a semi in Scotland saw the largest overall increase in the average amount that could be made, at 22% (or £17,657) over the past decade, followed by the South East and East Anglia (both 17%).
According to the report, while 34% of homeowners considering downsizing have lived in their current property for between 11 and 20 years and 19% have lived in their current property for between 21 and 30 years, many are choosing to move a lot sooner: 23% have only lived in their property for between 6 and 10 years and 11% have lived in their property for just five years or even less.
“There is no question that downsizers have a key role to play in the housing market, especially in a climate where it’s not just those looking to retire who want to free up equity from their home by moving somewhere smaller,” said Marc Page, mortgages director at Lloyds Bank.
“Many families view downsizing as a sensible way to lower their bills, help out their children or free up funds for retirement. However, selling your home is not a decision to be taken lightly. It’s important to give careful consideration to whether trading down is the best solution for you and to seek professional advice first.”
