The Growing Trend and Benefits of Property Downsizing in Today’s Market

Downsizing, a term that once conjured images of retirees looking for smaller, manageable homes, is now a dynamic and financially savvy move for many homeowners. Recent research from national estate agency Jackson-Stops has revealed some interesting insights into this growing trend.

According to Jackson-Stops’ latest findings, those opting to downsize can expect to free up an impressive £209,215 in equity. This figure represents the difference between selling a detached house and buying a semi-detached one in England and Wales. Remarkably, this ‘downsizer gap’ has not only increased by £5,467 since last year but has also surged by £91,622 over the past decade.

A Consistent Year-on-Year Increase

The trend of increasing equity gains for downsizers has been consistent for the past four years. The growth rate started at 2% from 2019 to 2020 and peaked at 14% between 2020 and 2021. Over this period, the total growth stood at 30%, amounting to nearly £1 million (£921,461).

Enquiries from those looking to downsize have returned to levels seen before the pandemic, with a 16% increase last year. However, there’s been a noticeable drop in 2023, likely due to a slower market influenced by higher mortgage rates and election uncertainties.

Ideal Regions for Downsizing

The research also highlights the best regions for downsizing, based on the amount of equity freed up. Excluding London, Elmbridge in Surrey tops the list for the second consecutive year, offering downsizers an average cash surplus of £789,795.

Elmbridge, encompassing towns like Esher, Cobham, and Walton-on-Thames, stands out with a 113% proportional difference in prices between detached and semi-detached houses. This gap has widened, as the average house prices cool, with semi-detached homes experiencing a larger price drop.

Other notable areas for substantial equity gains include Woking, Buckinghamshire, Tunbridge Wells, and Sevenoaks.

Trends in Downsizing

Over the past ten years, the most beneficial moments for downsizers financially correlated with periods of significant house price increases. Years like 2014, 2016, 2021, and 2022 saw notable proportional inclines in the benefits of downsizing.

Nick Leeming, Chairman of Jackson-Stops, sheds light on the evolving profile of downsizers. Today, they span various age groups, driven by desires to maintain lifestyles, manage expenses like school fees and holidays, and seek efficient homes in terms of heating and upkeep.

Leeming also observes a shrinking downsizer gap in line with general house price trends, signifying a shift from a seller’s to a buyer’s market.

Motivations and Considerations for Downsizing

The reasons for downsizing vary, ranging from equity release to support family, lifestyle changes, and relocations. Gaynor Cooper, Director at Jackson-Stops Sevenoaks, emphasizes the emotional aspect of downsizing, especially for those who haven’t moved in over a decade. She advises, “Be sure of where you want to be and feel settled with that decision as if it were your last move. It might not be, but many homeowners who haven’t moved house in over a decade may find the process much more emotionally stressful than perhaps planned for, with extra memories to untangle with. Certainty helps, as well as keeping a list of reasons firmly in your mind as to what the move will now allow you to do, whether that’s cheaper bills, a family holiday, a short commute, and so on.”

Tim Firth, Director at Jackson-Stops Weybridge, highlights the importance of being well-prepared and acting swiftly in the current market, “To downsize well in the current climate, you need to get everything ready as if the timeline is imminent, not two months away. Whilst it rarely is this short, I’ve found that many downsizers are offering themselves as cash buyers, meaning their offers are accepted on the grounds of a fast move, without lenders tightening the cogs or rate changes affecting decisions. This is one of the great advantages of downsizing, being able to be flexible, quick, and often therefore the preferred buyer.”

A Smart Move in Today’s Market

Downsizing has evolved from a lifestyle choice to a strategic financial decision. With the right planning and understanding of the market, it can unlock significant value and offer a more suitable living situation for a wide range of homeowners.