14th March 2016
Almost half of those thinking of moving home in the coming three years plan to downsize, according to new research from Lloyds Bank.
The lender’s analysis found that downsizing was cited as the single most popular factor for moving, with 46% of those surveyed planning to move to a smaller property with their next move.
The popularity of downsizing has grown in recent years, buoyed by the anticipated returns, as detached home owners could be in line for an average windfall of around £117,2301 if they move to a semi-detached house.
The figures also show that the average age for a downsizer is 53, at which point the greatest number, at 37%, had lived in their home between 11 and 20 years.
The main reason for downsizing, as cited by 53% of people, is to move somewhere, which better served their circumstances.
Other motivations, mentioned by 39% of respondents include reducing bills or freeing up equity. A further 31% asserted they were moving to a smaller home in a bid to provide extra cash for retirement.
A fifth said 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.
Nearly three quarters, at 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.
Some 29% said that they would invest in other financial products, whilst only 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.”
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.