Downsizing on the rise amid cost of living crisis

Record energy bills and the cost-of-living crisis has prompted a surge in downsizing activity over the past 12 months, new research claims.

Analysis of user activity on reallymoving.com has found the proportion of downsizers rose by 41% between January and December 2022.

Value downsizers, defined as those who are moving to a cheaper property than the one they’re selling, currently account for 43% of all home moves – up from 24% a year ago and now at the highest level since 2015., reallymoving said.

Defined as those moving to a home with fewer bedrooms than the one they’re selling, downsizers comprised 17% of all home movers in January 2022, rising steadily throughout the year to account for 24% of all home moves by December, based on data from approximately 55,000 conveyancing registrations. 

The website suggests record energy prices and inflationary pressures are encouraging people living in larger homes to reassess how much space they need and what they can afford.

Downsizers released 18% of their equity on average by moving to a smaller home last year, equating to £86,000, selling a property for £481,000 and buying for 395,000.

The regions where movers released the greatest percentage of the value of their home are Wales and Scotland at 24%, freeing cash lumps sums of £75,000 and £65,000 respectively, followed by the South East where downsizers typically released 21% of their property’s value. 

Meanwhile, analysis of the values being released shows that downsizers in London and the South East are benefiting from the largest lump sums - both £115,000 on average – followed by the East of England at £82,000.

Analysis of distances moved also shows that people are looking further afield than before the pandemic. 

In 2019, the median distance moved was 9 miles and the mean 51 miles. In 2022, the median distance moved increased to 14 miles while the mean jumped 28% to 66 miles. 
During 2022, 17% of home purchases were moves from one UK region to another, up from 12% in 2019.

London has the highest proportion of out of region moves, accounting for 39% of all purchases, meaning that for every one person selling a property outside of London and buying in the capital, there are 4.6 people selling a London property to buy a home elsewhere in the country. 

Rob Houghton, chief executive of reallymoving, said downsizing is a good thing for the health of the housing market.

He added: “The significant increase in downsizing activity over the past 12 months is likely to continue throughout 2023, as homeowners seek to release cash from their homes to help them through the current crisis. 

“Many older homeowners have paid off the mortgage on their family home but may still be struggling to deal with the rising cost of living, especially if they’re retired and on a fixed income, and the end of the Energy Price Guarantee is approaching in April.

“Heating and maintaining a large home and garden is time-consuming and expensive, so understandably people are looking for ways to reduce their bills and free up some capital, bringing forward plans to downsize sooner than they otherwise might have.”