A recent report from Lloyds Bank has found that downsizing continues to be a key driver behind property sales, with 45% of homeowners who intend to sell their home in the next three years planning on trading down.
It isn't hard to see why. Downsizing can release valuable equity (potentially an average of £97,722 according to the report) with 37% of respondents intending to use that cash to help fund their retirement plans. It isn't just for the older generation though – a lot of people are choosing to downsize much earlier than expected with the average age being just 40 years old, while a quarter (26%) of potential downsizers are in the 26-35 age range.
A key motivator behind downsizing, apart from planning to re-invest or fund a pension, is to help with daily living costs. Forty-three percent of respondents plan to downsize to reduce bills and outgoings – perhaps a sensible move at a time when housing costs seem to only ever be on the rise, and perhaps also explaining the increasing numbers of younger homeowners looking to find a smaller home.
However, there are fears that the increased demand for smaller properties could make issues of affordability even more intense, as supply continues to lag behind.
"Traditionally downsizing has been the preserve of the 'empty nesters' who no longer need family homes full of unused bedrooms, with it being a great way to release equity to fund pensions or other lifestyle options.
"However, if downsizing is to become popular across many age groups from 30 years upwards and we have first-time buyers also looking for smaller affordable homes, the inevitable truth is that prices for this size of property will increase disproportionately; the amount of equity available after downsizing will reduce, and the first-time buyer will once again be squeezed.
"If downsizing across all age groups is to become the norm, we need more houses of this size to be available to stop any bubble."
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