Downsizing 'could free up £129,000 per household'

There is huge potential for older homeowners to unlock housing wealth by downsizing to smaller homes, according to property group Savills.

Many people upsize as they climb the property ladder, but there often comes a point where you don't need so much space. Maybe the children have left home, or you're looking to simplify your life, save money on your heating bills, move closer to friends or family members, or choose a property that will be better suited to your needs as you get older.

Downsizing to a smaller home can free up some of the investment you have made in your home over the past few decades.

In England alone, there are 3.643 million homes owned by the over-65s with at least two spare bedrooms, according to data from the English Housing Survey.

An analysis by Savills shows that moving to a smaller home that might better fit these homeowners' needs could unlock an average of £129,000 per household and a total of £469bn across England as a whole.

The average sum that could be unlocked ranges from just under £60,000 in the North East to just over £239,000 in London.

Almost one-quarter of the total "unlockable" housing wealth is in the South East of England, amounting to £111bn -- over 40% more than across the North East, North West and Yorkshire and Humber combined.

Of course, as well as freeing up housing wealth for homeowners' retirement, downsizing helps to boost the housing stock available for sale. UK house prices are currently rising at an annual rate of 10%, partly due to a shortage of properties on the market, which is making it increasingly difficult for young people to buy their first home.

"Traditionally, homeowners have understandably been reluctant to downsize given their attachment to the former family home, a lack of financial incentive to do so, and a limited supply of good quality retirement accommodation to entice them to make the move," said Lucian Cook, head of residential research at Savills.

"However, with the costs of running a home increasing so rapidly, the financial benefits of downsizing are likely to come to the fore over the next 12 to 18 months and for some, this will outweigh the feared upheaval of a house move."

Cook added that in the longer term, if we are going to make more efficient use of the UK's existing housing stock, there needs to be a change in attitudes to downsizing -- among policy makers as well as individual homeowners.

"While most of the focus of housing policy is about getting younger generations on to the housing ladder, arguably much greater focus should be given to the provision of retirement housing that better suits the needs of active downsizers and that the older generations aspire to live in."

Separate research by retirement housing specialist Audley Villages suggests that more than half of people over the age of 55 are actively considering downsizing.

Of those who will gain money from moving to a smaller home, 43% said they would use it to support their lifestyle, 41% will spend it on holidays and 39% plan to use the funds to make improvements to their new home. Around a fifth, 22%, said they would use the money to help loved ones to get on the property ladder.