Shrinking residential spaces may offer a solution to the ongoing housing predicament
In the dynamic landscape of the UK housing market, downsizing has emerged as a significant trend in 2023. This shift is driven by a variety of factors, according to Quickmove Properties, a company offering bungalow-style park homes for over 50's in various coastal, rural, and semi-urban locations.
Financial motivation and equity unlocking are key factors influencing this trend, particularly in higher-value areas like London. Homeowners can unlock substantial equity by moving to smaller properties, reducing monthly outgoings and living costs. This motive is stronger in affluent regions where large homes hold substantial value.
Another significant factor is changing demographics and life stages. A significant portion of downsizers are older homeowners or Generation X individuals seeking to simplify their lifestyles after children leave home or upon retirement. They prioritize lifestyle over size, such as moving to more desirable locations like coastal areas.
Rising costs related to inheritance tax, council tax, and maintenance of larger or older family homes also make downsizing attractive. This is an attempt to avoid the hassle and ongoing expenses associated with large properties.
The decline in mortgage rates over 2023 has increased activity among groups reliant on borrowing, slightly reducing the proportion of downsizers compared to previous years. However, downsizing still forms the largest buyer group by share, showing persistent strong interest.
Regional variation is evident, with downsizing more prevalent in London (47% of movers) compared to regions like Wales (33%). In higher-end markets, cash buyers and investors with capital play a significant role, helping stabilize prices and demand despite broader mortgage market fluctuations.
Mark O'Dwyer, sales director at Quickmove, emphasizes the need for high-quality smaller homes for older people to move into. He stated that downsizers play a huge part in the property ecosystem, with their actions helping bring balance to the market and supporting efforts to overcome the housing crisis.
Quickmove Properties estimated that downsizers put 342,824 bedrooms back on the market in a single year. In 2023, they estimated that people selling their properties for something smaller accounted for 32% of the transactions.
Downsizers in the South East have put an estimated 52,993 bedrooms back on the market, while Scotland has the least number, with an estimated 28,502. However, the research does not provide details on how the number of bedrooms put back on the market by downsizers in other regions compares to the South East and Scotland.
In a recent company survey, 65.1% of individuals said they relinquished one bedroom while downsizing their property, with 7.4% giving up three bedrooms and 1.4% losing four bedrooms. Meanwhile, 24.7% of individuals gave up two bedrooms while downsizing their property.
This high percentage of downsizers in the UK housing market in 2023 is a testament to the interplay of financial relief, demographic shifts, cost avoidance, and regional property market dynamics. The trend underscores the importance of providing suitable properties for downsizers to move into, as highlighted by Mark O'Dwyer.
Investing in real-estate, particularly smaller properties, has become an appealing option for homeowners due to financial motivation and equity unlocking, especially in high-value areas like London. Additionally, downsizing can provide an opportunity for downsizers to relocate to more desirable locations, catering to changing demographics and life stages.
