Anna and her husband, like many others, faced a daunting task when they decided to downsize from their six-bedroom Surrey home. The Financial Times tells their story, in a feature on downsizing. Having lived there for 17 years and raised their three children, the emotional aspect was tough enough. However, the real challenge lay in the actual process of selling and buying a new home. Despite dropping their asking price by 20%, the property market’s sluggishness led them to a disappointing conclusion – their planned move fell through, and they’ve now decided to stay put.
This is not an isolated case. Estate agents across the UK are observing a surge in people attempting to downsize, especially since 2023. Reports from reallymoving and Jackson-Stops highlight a significant increase in downsizing, with the highest proportion since 2015.
The Market’s Hard Reality
Selling larger properties is becoming increasingly difficult. Data from HM Revenue & Customs and Zoopla reveal a decrease in property sales and an oversupply of larger homes on the market. These homes, particularly those with four or more bedrooms, are the hardest to sell. The reasons are manifold: high mortgage interest rates dissuading buyers, a lack of appetite for refurbishment due to soaring labor and materials costs, and many potential buyers opting to wait out the uncertain market conditions.
Mortgage Matters
The hike in mortgage interest rates, the highest in 15 years, is a key factor complicating the upsizing dreams of many. With mortgage approvals down significantly, the financial feasibility of moving to a larger home is out of reach for many. Adrian Anderson of Anderson Harris points out that many are not prepared to compromise their lifestyle for a larger mortgage under these conditions.
The Equity Conundrum
While a significant number of over-50s have substantial equity in their homes, rising energy and mortgage bills are forcing many to consider selling their homes earlier than planned. Louise Rowlands notes an increase in downsizers due to impending financial pressures, particularly those on fixed-rate or interest-only mortgages.
The Challenge of Price Adjustments
Many sellers are finding it hard to match their price expectations with market realities. Despite the slow market, asking prices are still significantly higher than in previous years. This mismatch is leaving many homes unsold, as observed by Tim Bannister from Rightmove.
The Bigger Picture
Almost 90% of people aged 65-79 live in homes that are too large for their needs. While downsizing could alleviate the housing crisis, the costs associated with moving, particularly stamp duty, often make it financially unviable unless the downsize is substantial. The lack of suitable housing, especially for those downsizing later in life, is another major obstacle.
Case Studies: From Somerset to Surrey
Faith Glasgow’s experience offers a brighter perspective. She and her husband moved from Hackney, east London, to Somerset, finding joy in their new surroundings and significantly reducing their living costs. On the other hand, others like Richard Oliver and Carol Peett in Pembrokeshire face stiff competition for smaller properties, whether it’s due to high demand in desirable areas or the scarcity of suitable homes.
A Glimmer of Hope
As mortgage rates begin to decrease, there might be a silver lining for those looking to downsize. The market might slowly become more accommodating, but for now, the journey of downsizing remains fraught with challenges and uncertainties.