Mov­ing down the prop­erty lad­der can pay off

Down­siz­ing in a flat mar­ket may not seem ap­peal­ing but it could net you a size­able sum of money to play with. Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

MOV­ING to a smaller prop­erty can be a heart-wrench­ing de­ci­sion and you may find a host of rea­sons not to bother, but new re­search re­veals that down­siz­ing could be well worth­while.

Fig­ures from Sav­ills for the York­shire Post show that if you swap a large, mort­gage-free, fivebed­room plus home in Har­ro­gate for a two-bed­room prop­erty in the same town, you could pocket over half a mil­lion pounds.

Nat­u­rally, those in the big­gest prop­er­ties in the best ar­eas will ben­e­fit most from down­siz­ing,though there are wide dis­par­i­ties through­out the county.

The av­er­age gain from sell­ing a five-bed­room house in York­shire and buy­ing a two-bed­room is £326,565, though in Hull, where val­ues are lower, that falls to £137,048.

If you move from a four- to a two-bed­room home, the av­er­age gain in York­shire is £157,414. If you are in Har­ro­gate that rises to £246,722 and in Hull it is £96,000.

Swap­ping a three-bed­room for a two-bed­room prop­erty will give a county av­er­age profit of £44,503, but in Har­ro­gate it is close to dou­ble at £76,231 in Har­ro­gate and in Hull it is £26,487.

Neal Hud­son, As­so­ciate Di­rec­tor of Res­i­den­tial Re­search at Sav­ills, says; “Mov­ing to a smaller home af­ter the chil­dren have flown the nest prob­a­bly sounds a very sen­si­ble idea for many peo­ple. Not only will they be liv­ing some­where cheaper and more man­age­able to run, but they are also likely to be able to re­lease wealth that could help to fund their later years or be passed to younger fam­ily mem­bers try­ing to get on the hous­ing lad­der.

“In­deed, re­tirees and those 55-plus, who are ap­proach­ing re­tire­ment, have a great deal of eq­uity tied up in their homes. Our anal­y­sis sug­gests that in to­tal, two-thirds of all the wealth tied up in owner oc­cu­pied homes is held by this age group.”

Ac­cord­ing to the Sur­vey of English Hous­ing, there has his­tor­i­cally been a sur­pris­ing level of re­sis­tance to mov­ing among older peo­ple, de­spite the fact that half of over-55s have a big­ger home than they need.

Those in their re­tire­ment years ac­count for just 6.5 per cent of all home movers each year and down­siz­ing tends to be trig­gered by a life event that high­lights the need for a smaller prop­erty.

Un­til then, el­derly peo­ple may be deeply re­sis­tant to leav­ing the fam­ily home and the neigh­bour­hood, ac­cord­ing to a 2009 report by the Cen­tre for Hous­ing Stud­ies.

How­ever, down­siz­ers of all ages now drive 22% of prime Lon­don sales and 38% of those in the prime re­gional mar­ket.

Down­siz­ing by at least two bed­rooms in the South East brings the great­est re­wards. A move from a five- to a three-bed home there would re­lease an av­er­age of over £450,000 and that fig­ure will rise sig­nif­i­cantly if you move from a high value area to one where av­er­age prices are lower.

This is one of the fac­tors driv­ing re­tirees from Lon­don and the South East to York­shire’s coast and Wolds.

The trend to­wards down­siz­ing in gen­eral is likely to gain mo­men­tum as par­ents in­creas­ingly tap into their eq­uity to help their chil­dren on to the hous­ing lad­der.

Neal Hud­son says: “Al­ready, over the past five years, our fig­ures show that first time buy­ers have re­ceived two or three times as much parental help with their de­posit as they did be­fore the fi­nan­cial cri­sis.

“It’s in­ter­est­ing to com­pare the amount of cash re­leased by a main­stream move from a threeto a two-bed­room prop­erty with the av­er­age de­posit needed by a first-time buyer. Although there is some re­gional vari­a­tion, this com­par­i­son in­di­cates such a move would re­lease eq­uity worth two to three times the size of the de­posit needed.

Even away from the up­per end of the hous­ing mar­ket, down­siz­ing by par­ents could be a God­send for first time buy­ers that helps to fuel sales in the lower ech­e­lons.”

This is likely to un­der­pin an in­crease in down­siz­ing, says Sav­ills. It cal­cu­lates that 55,000 homeowners now down­size each year, re­leas­ing eq­uity of around £7 bil­lion. Over the next five years, it be­lieves that the fig­ure will rise to 90,000 house­holds mov­ing down the prop­erty lad­der to re­lease eq­uity of around £14.6 bil­lion.

Other good rea­sons to go smaller in­clude lower en­ergy bills and less main­te­nance, although those who de­cide to stay put of­ten say they are wait­ing for prices to rise back to their 2007 height and per­haps be­yond. They may have a long wait for that.

Sav­ills be­lieves that while Lon­don will see a 21 per cent growth in house prices by 2017, York­shire may only man­age around five per cent.

Av­er­age house prices should sta­bilise this year, they say, but will strug­gle to show in­fla­tion-beat­ing growth for the fore­see­able fu­ture.

The forecast for York­shire is for a stag­nant 2013 with no growth, a drop of 0.5 per cent in 2014, a rise of 0.5 per cent in 2015, a 2.5 per cent in­crease in 2016 and a three per cent rise in 2017.

ROOM TO GROW: The Sta­bles of­fers spa­cious ac­com­mo­da­tion and large south-fac­ing walled gar­dens that are a safe play area for chil­dren. It also comes with the chance to cre­ate a self-con­tained an­nexe in the west wing which at present houses a large play­room and home of­fice.

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