Real Estate

The downsizer’s dilemma

Anna and her husband always knew it was going to be difficult to sell the home in which they had lived happily for 17 years and where they brought up their three children. Little did they know how hard the process of leaving it would turn out to be.

“When our youngest child left for university, our thoughts turned to: where next?” says Anna, who is in her mid-fifties and did not want to give her real name.

She and her husband put their six-bedroom house in Surrey on the market in January. “We recognised it wasn’t ideal timing but anticipated that if we needed to drop our sale price, the people we were buying from would have to drop theirs too.”

After six “slow and painful” months, a price cut and a change of estate agents, the couple provisionally accepted a “disappointingly low offer” 20 per cent below their updated asking figure.

“Unfortunately, the vendor of the house we wanted to buy hadn’t experienced the price erosion we had encountered and it wasn’t meant to be,” Anna says. Wearied by the process, they have taken the house off the market and say they will stay put for now.

a smiling woman in overalls outside a blue-painted door
Faith Glasgow and her husband moved from east London to Somerset: ‘Of course we miss aspects of Hackney but we have been made very welcome’

This year, estate agents report a marked increase in people trying to sell large homes to move somewhere smaller — moving advice company reallymoving says 31 per cent of all home movers so far in 2023 are downsizing, the highest proportion since 2015, while national estate agency chain Jackson-Stops says inquiries from downsizers are more than a fifth higher than in 2019, before the Covid-19 pandemic.

However, as Anna and her husband found, actually making the move is proving a struggle.

While property sales have slumped — HM Revenue & Customs says transactions fell 17 per cent this September compared with the same month a year earlier — the number of homes for sale per estate agent office is at a five-year high. And big houses are proving the hardest to shift.

Chart showing that larger detached homes are the most oversupplied

Homes with four or more bedrooms are taking the longest to sell in seven of England’s nine regions, Zoopla says, and are the most oversupplied property type — detached homes with four or more bedrooms account for 18 per cent of all homes on the market but only 7 per cent of buyer inquiries.

“Downsizing in the current market can be tough as the demand for large, draughty family homes is slowing, while demand for smaller properties with lower running costs is growing,” says Anto Clay, buying agent at Stacks Property Search.

There is also little appetite for refurbishment. “More often than not, houses that have been in a family for a long time require a significant amount of work to bring them up to date — and with labour and materials costs 30 per cent higher than a year ago, buyers are shunning major projects,” says Jo Eccles, managing director of buying agents Eccord.

terraced brick houses
Wells, Somerset, within walking distance of the Mendip Hills © Craig Joiner Photography / Alamy

For the most part, however, larger homes are languishing because the highest mortgage interest rates in 15 years have made it so much harder for those trying to move up the ladder to a bigger house. “House price falls have been modest over 2023, compared with a 20 per cent reduction in buying power [if they kept their mortgage repayments the same],” says Richard Donnell, Zoopla’s executive director of research. “Higher mortgage rates tend to impact upsizers more than most, as they buy bigger homes and require larger mortgages.”

Mortgage approvals in September were down more than a third compared with the same month last year, according to the Bank of England, as even those who could afford to move are choosing not to when the outlook is so uncertain.

“Borrowers got used to cheap debt and a certain lifestyle, with plenty of disposable income to spend on holidays, dining out, clothes, cars and school fees,” says Adrian Anderson, director of Anderson Harris mortgage brokers. “This group are simply not prepared to take a larger mortgage and cut back on their lifestyle to trade up right now. There is a lot of waiting to see what happens to interest rates and house prices.”

While many downsizers aged 50 and over have accrued significant equity in their home, or own it outright, increasing numbers of people are being forced to sell their houses earlier than planned due to rising energy and mortgage bills.

Louise Rowlands, a buying agent at Surrey-based Richard Winter Property Search, has seen “a huge increase” in people deciding to downsize. “There are a significant number on a fixed-rate and some on interest-only mortgages who are feeling or about to feel a huge squeeze on cash flow when they have to re-fix their rate as it ends,” she says.

© James Oses

Hamptons estate agency says the proportion of all its downsizer movers who are trading down significantly in value by moving to a home that’s less than half the price of the one they’re selling has increased to 38 per cent, from 30 per cent in 2019 and 27 per cent two years before that.

While some of these moves will be prompted by, for instance, releasing equity to help children get on the property ladder, David Fell, Hamptons’ senior analyst, says many will probably be downsizing to reduce mortgage payments to a more manageable level.

Sally, an accountant with two children, is just about to put her house in the home counties on the market so she and her husband can buy somewhere with one less bedroom and one less reception room. “We want to clear the £120,000 mortgage but hope to stay in the same area for school,” says Sally, who is in her forties and did not want to give her last name.

Yet the market is working against these downsizers. Matthew, 48, is selling up to buy a smaller house in the same part of Surrey but has had the sale fall through three times in the past nine months — he has just put it on the market again with a £50,000 reduction.

“We can’t afford to reduce again as we won’t be able to buy,” says Matthew, who preferred to remain anonymous. “House prices in our area aren’t coming down as quickly as we’ve reduced.”

Indeed, many owners have been reluctant to cut prices — or, if they have reduced, the discounts are not big enough. Despite the slow market, asking prices when a property is first listed have risen 2.4 per cent in the past year and are still 25 per cent higher than in 2019, according to data from TwentyCi.

Richard Oliver is selling his five-bedroom home in Wiltshire to move to Bristol to be near his family but is competing for smaller homes with young couples and families

“Sellers who are struggling to adjust their price expectations to match current activity levels are finding that their homes are being left on the shelf,” says Tim Bannister, director of property science at Rightmove.

There are other, longstanding issues for would-be downsizers. Almost 90 per cent of people aged 65-79 live in “under-occupied” homes, according to research institute the International Longevity Centre — and it is often suggested that, if they were incentivised to move, this could help ease the housing crisis.

However, even though over-55s now account for 75 per cent of all housing equity in the UK, according to research by Savills estate agency, many people are reluctant to sell due to the cost. “With all moving fees and, especially, stamp duty, you need to be doing a meaningful downsize otherwise the money you are left with is marginal,” says Roarie Scarisbrick, partner at buying agency Property Vision.

Downsizing to a cheaper area is an option — Bristol-based property search agent Charlotte Strang is seeing more people coming from London, for example. “I’m hearing more from buyers that they want to reduce their mortgage significantly or remove it entirely now,” she says. However, the big problem across the country is a lack of suitable housing, especially for those downsizing later in life.

“Developers are focused on detached family homes but we have an ageing population, so suitable housing in the communities where downsizers want to live would be a real incentive to downsize, while the scandals over leasehold, ground rent and building safety have put some downsizers off moving to new-build flats” says Paula Higgins, chief executive of advice group the HomeOwners Alliance.

In many areas, downsizers are competing for smaller homes with young couples and families. Richard Oliver, a retired major general, is selling his five-bedroom house on 1.25 acres outside Devizes, Wiltshire, for £1.35mn so he can buy a two or three-bedroom house or flat close to his family in the Bristol suburb of Clifton.

“As a beekeeper, I would like a garden in which to run a couple of colonies, but I realise that such is the demand for property in Clifton that I may well have to move first into rented accommodation,” says Oliver, who is in his late seventies.

Or downsizers are battling each other for homes. In Narberth, Pembrokeshire, Carol Peett, founder of West Wales Property Finders, is receiving several inquiries a week from buyers in their sixties and seventies wishing to sell large houses with big gardens to move to bungalows, of which there are few and any that do come on the market are expensive.

boats and buildings along the river in Henley-on-Thames
People in their seventies and eighties who wish to downsize in areas such as well-heeled Henley-on-Thames, Oxfordshire, are battling each other because of the scarcity of small houses © David Chapman / Alamy 

In well-heeled Henley-on-Thames, Oxfordshire, Jemma Scott, partner at The Buying Solution, had an octogenarian client battling her octogenarian cohort from the tennis club over a property. “It was brutal,” Scott says.

Mortgage rates are nevertheless drifting down, offering some hope to those looking to downsize, while those who manage to make the move are often delighted to have done so.

Take writer Faith Glasgow. She and her husband have just sold their home of 24 years in Hackney, east London, to move to a house outside Wells, in Somerset, within walking distance of the Mendip Hills.

They had already cleared their mortgage but the kind and size of houses they were looking at in Somerset were typically about £400,000 cheaper than homes such as theirs in London, meaning they are sitting on a substantial lump sum.

“Of course, we miss aspects of Hackney — the diversity, the late-night shops around the corner, our friends — but we have been made very welcome,” Glasgow says. “I get a real kick from the views up the hill, the black starry nights and the prospect of a different way of life.”

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