Many Home Owners are Now Looking to Downsize

by Mark Johnston

Size has long been a representation of ones success and statistics has shown that from the 1950s to now homes have increased in size approximately 140%.

However, within recent years there has it seems been a new trend developing. A trend which reflects the housing collapse and rising energy costs. People are no longer dreaming of owing bigger, better homes, but rather smaller and more efficient ones.

New research has shown that the number of people in theUKlooking to downsize their home is nearly double that wanting to buy a larger property. Trading down is currently the biggest reason for moving in 9 out of 10 regions inEnglandandWales.

Britain’s aging population along with a squeeze in lending is thought to be driving this particular trend at the moment.

Rightmove.com, a property website, said 40% of sellers say they are looking to trade down compared with 25% of sellers who hope to trade up to a larger family home. The website also added that trading down from a large family home was now the biggest single reason given for selling by home owners approaching estate agents.

Other research has shown that those trading down are generally from the ‘baby boom’ generation, who have seen a sharp rise in the value of their homes in previous years, but are short of easily available cash.

Some experts believe that this generation is the only generation that will be able to down size as none of the generations that follow them will be able to afford the large houses to down size from. Their only hope of a property income after retirement will be to get themselves back in to debt or to rent their properties out.

These people are therefore rich on paper in terms of property wealth, but it seems are short of the actual cash they need to fund their lifestyles and family commitments.

The now high cost of living, coupled with rock bottom interest rates on savings and also the poor returns now given on personal pension investments, has therefore left many retired people struggling to pay the bills.

Although, while many older home owners want to down size to help them in their retirement, others need cash to help their adult children cover their debts or help them pay for a deposit on a property of their own.

The problem here however is the recession and the fact banks and building societies are once again beginning to ration mortgages means it is more difficult for people take out bigger loans in order to move up the property ladder and the market therefore stalls once again. At the same time recent increases in mortgage rates have further dampened market activity.

Miles Shipside, director of Rightmove, said “there are now more old people at the top of the chain trying to downsize and fewer at the bottom trying or able to trade up. The ability to trade up is a vital component of a healthy housing market”.

 

 



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