Forty per cent of sellers looking to trade down, but only 25 per cent hope to trade up Downsizing trend is putting a cap on house price rises, survey found London is the only exception due to the high concentration of equity-rich buyers
By Sean Poulter
Baby boomers trying to ‘downsize’ are driving the housing market, say researchers.
Trading down from a large family house is now the single biggest reason given for selling by homeowners approaching estate agents, says property market expert Rightmove.
Some 40 per cent of sellers say they are looking to trade down, compared with 25 per cent who hope to trade up to a larger more expensive property.
Trading down is the biggest reason for moving home in nine out of ten regions in England and Wales.
The only area where those trading up outnumbers those trading down is London, where there is a higher concentration of equity-rich buyers.
Rightmove said 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.
The high cost of living, coupled with rock-bottom interest rates on savings and poor returns on personal pension investments, has left many retired people struggling to pay the bills.
At the same time, many need cash to help their adult children cover debts or pay for the deposit on a property of their own.
These people are rich on paper - in terms of property wealth - but they are short of the cash they need to fund their lifestyles and family commitments.
Rightmove said the trend in downsizing is putting a cap on house price rises, after it found that there was no increase in the average property asking price in May compared with April.
The company puts the average asking price across England and Wales at £243,759.
At the same time, the number of new properties coming on to the market was an average of 26,595 in May, which was down by 10per cent on April.
This is the first time there has been no increase in the 11 years it has been surveying the market.
Recent increases in mortgage interest rates have further dampened market activity, it said.
Miles Shipside, director of Rightmove, said: ‘There are 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.
‘Some people may be facing redundancy and looking to reduce their outgoings, and others may be looking to supplement their underperforming pension pots.
'With overall market volumes already in the doldrums, we need a fair and consistent wind of mortgage lending to prompt a speedier housing market recovery.’
The recession and the fact banks and building societies are rationing mortgages also mean it is difficult for people to take out bigger loans in order to move up the property ladder.
At the same time, recent increases in mortgage interest rates have further dampened market activity.
The number of people in the UK looking to downsize their home is nearly double that wanting to buy a larger property, new research reveals.
Britain's aging population as well as a squeeze in lending are thought to be driving the trend, according to property website Rightmove.
Meanwhile, demand from first-time buyers continues to fall after the stamp duty holiday on homes between £125,000 ($A200,530) and £250,000 expired in March.
Only in London is there more uptrading activity, bolstering evidence of a two-speed housing market in the UK, Rightmove adds.
Miles Shipside, Rightmove director, said: "The ability to trade up is a vital component of a healthy housing market.
"There are more old people at the top of the chain trying to downsize and fewer at the bottom trying or able to trade up.
"Some people may be facing redundancy and looking to reduce their outgoings and others may be looking to supplement their underperforming pension pots."
Shipside blames borrowing difficulties for those looking to trade up for widening the mismatch and warns that a Greek default could further reduce mortgage availability.
"With overall market volumes already in the doldrums, we need a fair and consistent wind of mortgage lending to prompt a speedier housing market recovery," he said.
This effect is weaker in the capital which has a higher concentration of wealthy homeowners who can afford to upsize.
Shipside also predicts a boost in the London housing market from foreigners looking for safe property investments as the eurozone crisis unfolds.
The survey comes as flat average asking prices in May bucked the trend of a buoyant spring market.
Average UK asking prices usually rise between April and May but this year they remained stagnant at 243,759, only 22 higher than last month.
Shipside also expressed concern that the early spring slowdown may run seamlessly into a longer summer lull created by the double effect of the Queen's Diamond Jubilee and the Olympic Games.
There used to be an easy market of 2 bed bungalows in the UK. You could buy them cheap, do a loft conversion and extend out back. They used to have a fair bit of land. You could turn them into a nice 4 bed house and flog them off and make a killing.
Nowadays, the price of 2 bed bungalows is close to that of a 4 bed house. Too much competition between downsizers and developers. You can't convert new built 2 bed bungalows becasue they don't have the land.
Whether this will happen in Oz is hard to say, but the fact is, the elderly don't like living in two storey accomodation - and will pay for single storey.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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