The latest Downsizers Report from Lloyds Bank found that those moving to a bungalow can free up £103,715 on average, while those moving to a semi-detached house could raise up to £121,686.
For those trading down, the potential amount that can be raised by downsizing from a detached property to a bungalow has risen by 8% (or £8,081) over the past decade; a downsizer today would receive an average of £103,715; compared with £95,634 in 2004.
The potential amount of cash homeowners could raise by downsizing their property from a detached home to a semi detached stood at an average of £121,686 in 2014; an increase of 6% (£6,943) since 2004.
Downsizers in the capital stand to make the most, with sums reaching an average of almost £289,927 from trading down from a detached home to a bungalow.
Buyers downsizing from a detached home to a bungalow in East Anglia saw the largest average increase of 38% (or £24,500 – the largest rise over ten years in monetary terms), followed by the South West (32% or £22,664) and Northern Ireland, (29% or £11,477).
Those moving from a detached home to a semi in the South West saw the largest overall increase in the average amount that could be made over the past decade, at 18% (or £19,707), followed by the North (15% or £37,367). London is again at the bottom of the table for the changes over ten years, with a 12% reduction, equivalent to £32,014 less, despite the windfall still being the highest in 2014 at £237,614.
Two in five (43%) downsizers will reinvest their money in a new property, a quarter (26%) will invest in other financial products and over one in ten will invest in their pension (13%) or give to their family members (13%). Just over a quarter are (26%) are planning to move to a more affordable area, 5% less than in 2013.
Almost two thirds (63%) said one of the main reasons for downsizing is to find a smaller property that better suits their current circumstances. 28% of downsizers are also looking to release equity from their property, and a quarter (25%) are looking to help support their retirement plans.
Andy Hulme, Mortgages Director at Lloyds Bank, comments:
“Downsizing is clearly still a major part of the housing market with over half of potential homemovers considering a smaller property. The volume of downsizers is therefore helping to keep the market moving, freeing up larger properties for those making their way up the ladder.
“Once people do look to trade down, the benefits are clear. Downsizing can generate significant amounts of money, on average over £100,000 in 2014. It also helps to lower the cost of household bills and frees up funds so that people can enjoy their retirement or invest their money for the future.”
