Housing market: ‘major increase’ in people downsizing to smaller properties amid cost of living crisis

Research by estate agency Savills has found the number of the people looking to downsize has risen markedly since September 2022.

After a survey of its 130 offices around the UK, it found the number of “older” homeowners looking to move from a larger family home into a smaller property had increased by more than half over the last six months.

It comes as the housing market continues to show some signs of a recovery after prices nosedived in the wake of Liz Truss’s mini budget. House price analyses from Halifax and Zoopla have suggested the housing market is returning to pre-Covid norms following three years of high demand and rocketing prices - although separate research by Nationwide suggests prices are still sliding downwards.

In 2022, UK house pricesrose to record levels, with seaside towns in England accounting for some of the biggest annual increases. But the impact of record inflation on people’s budgets and the effect rising interest rates have had on mortgages led prices and demand to tumble in late 2022.

So, what does the Savills research tell us about downsizing - and what could it mean for the housing market? Here’s what you need to know.

What does Savills’ research show?

According to the estate agency - one of the largest in the UK - the number of downsizers who are active in the housing market has soared 53% over the last six months.

But while more people are looking to move from a larger home to a smaller one, they are not necessarily having much luck in finding a property. 79% of the agents surveyed by Savills said finding the right place was the biggest barrier to downsizing.

The agency said popular criteria for downsizers looking to move included homes being in good condition, cheaper to run and lower maintenance overall. Being able to have room for family or friends to stay over were also high on downsizers’ wish lists.

When they do find somewhere, these prospective buyers - who Savills described as “equity-rich older homeowners” - are not hindered by the high mortgage rates currently being seen on the housing market.

Several reasons have been given for why people are looking to downsize. Andrew Perratt, head of UK residential property at Savills, said: “Most will have enjoyed significant house price growth over their period of ownership, while owners of large family homes will have seen their properties appreciate substantially over the course of the pandemic, meaning they are sitting on a significant reserve of equity.

“Across our network, our downsizer vendors are telling us that they will prioritise using the extra equity to help family with their finances, or to supplement a retirement fund and reduce overheads.”

It comes as energy costs remain substantially higher than they were before the Covid pandemic. It also follows news that several major utility bills are rising in April, with both factors eating into disposable incomes at the same time as goods and services across the economy are becoming much more expensive.