In recent years, a growing number of baby boomers, those in their 50s and 60s, are choosing to downsize their homes earlier than traditional retirement age. This shift in the property market is not just a matter of convenience or a lifestyle change, but also a strategic financial move.
The Rise in Property Values
Over the past decade, the value of detached properties in the UK has seen a significant increase. Back in 2013, the average cost of a detached property was £268,000. Fast forward to today, and that figure has skyrocketed to £457,222. This rise in property value has left many baby boomers with a substantial amount of equity in their homes.
Why Downsize Early?
The trend of downsizing isn’t just about moving to a smaller home; it’s also about releasing the cash tied up in larger properties. Moving from a detached home to a smaller one in popular downsizer locations can free up between £120,000 and £350,000. This windfall can be used in various ways, such as boosting retirement savings, helping children onto the property ladder, or funding luxury treats like annual cruises.
The Best Places for Downsizing
East Lindsey
Research by Hamptons has identified East Lindsey as the most popular location for downsizers aged between 50 and 60. This area offers a balance of coastal beauty and rural charm, with properties averaging around £235,000. Selling an average detached home to move here could release about £220,000.
Variety in Housing Options
Downsizers are often looking for properties that require less maintenance and are close to local amenities. In East Lindsey, terraced houses average at £157,000, and flats at £106,000. This means selling an average detached home could free up over £300,000.
Other Hotspots – Torridge and Beyond
Torridge, in the southwest, is another hotspot, where property prices are slightly higher. The region’s proximity to North Devon’s heritage coast and Dartmoor National Park makes it attractive. Most regions in the top 15 for downsizers share similar qualities: coastal locations, rural settings, and bustling smaller towns.
Financial Implications of Downsizing
Downsizing in your 50s can have significant financial advantages. It can provide a substantial cash windfall, reduce monthly outgoings like mortgage payments, and lead to lower ongoing costs for a smaller home. Michelle Lawson, a mortgage adviser, highlights the trend of using equity to help children buy their homes.
When choosing a new home, it’s crucial to consider factors like public transport, local amenities, and community activities. The home should be manageable in old age but also spacious enough for family visits.
Challenges and Costs
Moving away from a family home filled with memories can be emotionally challenging. There’s also the potential loss of a support network when moving away from friends and family.
Despite the potential financial gains, downsizing comes with its own set of costs. These include estate agent fees, solicitor fees, surveying fees, removal fees, and possibly stamp duty. Halifax reports that the average cost of moving home in the UK is nearly £12,000.
Conclusion
Downsizing for ‘young’ retirees can offer financial freedom and a simpler lifestyle. However, it’s essential to weigh the financial benefits against the emotional and monetary costs of such a significant move. As the trend continues, it’s clear that more and more baby boomers are seeing the advantages of downsizing earlier in life.