Downsizing your home raises £97,722 on average in the UK and 43% do so to reduce bills.

17th November 2013

Downsizing remains the main reason why people sell their home according to a report from Lloyds Bank. Some 43% of downsizers want a to move to a smaller property to help reduce bills while 37% say it will help support their retirement plans.

The bank says that an average of £97,722 is raised by downsizing home – with London the most lucrative place to do so, with an average amount of £272,000.

Some 45 per cent of homeowners planning to sell their property in the next three years saying they’d like to downsize.

Thirty one per cent said they were looking to free up equity so they could re-invest in something other than property or a pension, 12% wanted to invest in a pension and 18 per cent said they would give money to their family while 29% of those considering downsizing are doing so earlier than they expected.

Some 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 shows that the average age of those looking to downsize was just 40 years old, with 26% of potential downsizers aged just from 26 to 35. Just over a quarter or 26% were aged 36 to 45 and 24% was made up of potential downsizers aged 46 to 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. (See table 1).

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. (See table 2).

Regional variations

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%).

Property turnaround times

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.

Marc Page, Mortgages Director, Lloyds Bank, says: “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.

“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.”

Table 1: 10 Year % Change in Downsizing Increase: Detached to a Bungalow

  Downsizing windfall, 2003 (£)** Downsizing windfall, 2013 (£)** 10 year % change 10 year £ change
North 58,974 79,334 35% 20,360
East Midlands 58,371 71,977 23% 13,605
North West 74,245 91,333 23% 17,088
South East 132,819 159,846 20% 27,026
Northern Ireland 43,890 52,336 19% 8,446
Wales 55,734 65,646 18% 9,912
East Anglia 74,976 84,650 13% 9,674
South West 76,623 83,318 9% 6,695
Greater London 252,169 272,060 8% 19,892
Scotland 56,090 60,367 8% 4,277
Yorkshire and Humberside 63,087 67,813 7% 4,726
West Midlands 61,199 59,457 -3% -1,742
United Kingdom 87,501 97,722 12% 10,221

Source: Halifax database 12 Months to October

Note: * difference between average price of detached and a bungalow.

Table 2: 10 Year % Change in Downsizing Increase: Detached to a Semi

  Downsizing windfall, 2003 (£)* Downsizing windfall, 2013 (£)* 10 year % change 10 year £ change
Scotland 81,055 98,712 22% 17,657
South East 152,102 178,465 17% 26,363
East Anglia 82,295 96,103 17% 13,807
South West 104,752 121,643 16% 16,891
Wales 82,568 93,659 13% 11,091
North 79,877 90,514 13% 10,637
Yorkshire and Humberside 93,393 101,309 9% 7,915
Northern Ireland 61,412 65,585 7% 4,173
West Midlands 105,163 109,876 5% 4,713
North West 100,246 104,522 4% 4,276
East Midlands 88,475 90,415 2% 1,940
Greater London 213,991 217,620 2% 3,629
United Kingdom 103,284 116,474 13% 13,190

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