Nearly half of homemovers say they will downsize in the next 3 years

Nearly half of homemovers say they will downsize in the next 3 years

According to new data released by by Lloyds Bank this morning, nearly half of those thinking of moving home within the next three years plan to move to a smaller property, with downsizing being cited as the single most popular factor for moving.

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 £117,2301 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.

10 Year % Change in Downsizing Windfall: Detached to a Semi

 

Downsizing windfall, 2005 (£)

Trading down windfall, 2015 (£)

10 year % change

10 year £ change

South West

109,687

130,654

19%

20,967

East Anglia

88,177

101,878

16%

13,702

East Midlands

92,097

103,416

12%

11,319

Scotland

90,308

100,778

12%

10,469

West Midlands

115,726

123,624

7%

7,898

Yorkshire and Humberside

108,594

115,792

7%

7,198

Northern Ireland

61,073

68,005

11%

6,931

Wales

89,784

95,178

6%

5,394

North

90,957

92,651

2%

1,694

South East

178,668

178,904

0%

236

North West

115,499

105,695

-8%

-9,804

Greater London

272,721

201,052

-26%

-71,669

UK

115,970

117,230

1%

1,260

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Latest Comments

MBM Homelets
MBM Homelets 23 Mar 2017

Although this is a very positive step, there is little or no guarantee of the standard of workmanship employed by the tenants. We have had experience of a professionally decorated property being ' painted'...

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ajay
ajay 21 Mar 2017

How is the "robust evidence" looking now?

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NathanG 20 Mar 2017

I've been watching the series so far and am completely baffled by the cases that were presented. Though, I don't think that we can protect ourselves from every scam possible - it will just make the scammers...

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Landlady14
Landlady14 01 Mar 2017

You would think so Niraj Shah! My experience only proves that there are varying qualitiers of professional in all aspects of property letting. None of the ones I have dealt with, from letting agents to...

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Mark
Mark 01 Mar 2017

Thanks for this article. Hopefully one day everybody's lifestyle will be eco-sustainable.

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Ben Taylor
Ben Taylor 28 Feb 2017

I was convinced that London was the most expensive!

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Alan Read
Alan Read 28 Feb 2017

Australia are leading the way in this I think. The trouble with Britain is we don't get enough sun to make use of solar power.

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James Powell
James Powell 27 Feb 2017

This is a very good news.

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DanHumphreys
DanHumphreys 27 Feb 2017

It sounds like a good idea. Anything to help the younger generation get a foothold.

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Matt
Matt 20 Feb 2017

Is this fake news?

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Matthew Hollywood 07 Feb 2017

Matthew Hollywood - Director Mishon Mackay Land & New Homes - Brighton The shortage of New Homes is in part effected by the lack of land sales. Land sales are held back because there is a disparity between...

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CommercialTrust
CommercialTrust 30 Jan 2017

Hi Graham, Would be interesting to see the above figure calculated against an investment via a Lt Company /SPV structure and if the investor found themselves pushed in to the higher tax bracket. Mortgage...

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