The rising tide of downsizers, a rich seam for estate agents?
The average price of a downsizer's home, even excluding London, is £805,804. In 2023, 41% of movers reduced their bedroom count, a significant increase from 32% in 2022 and 33% in 2019. This spike represents the highest level of downsizing since tracking began in 2016.
Why is this?
Energy Costs: High energy expenses are a primary motivator for homeowners to seek smaller, more efficient properties. Add this to a general cost of living increase, and the bills add up for larger houses. Moving from a five-bedroom EPC E rated house to a three-bedroom EPC C rated house could save homeowners an average of £3,806 annually on energy bills. This is not to mention council tax savings gained from moving to a smaller property.
Mortgage Considerations: With current interest rates, some still on pre-Truss fixed rates may find the increased costs unsustainable when their term comes to an end.
Cash Purchases: A record-breaking 71% of downsizers paid for their new homes in cash in 2023, up from 62% in 2022. They are in an advantageous purchasing position, and can make their move faster.
Labour Government: Jumping the gun ahead of next month's budget somewhat, but Starmer's rhetoric strongly suggests that retirees/the wealthy (i.e., likely those with bigger houses to downsize from) could incur higher tax burdens. Plus, for family owners of large properties, the addition of VAT to private school bills will put further pressure on the general cost of living, and it might be that a decision to downsize is taken with one eye on their childrens education. So whilst prices may fluctuate, it is likely there will be more activity in the premium markets as a result.
Financial Implications: The financial benefits of downsizing are substantial - on average, buyers moving to smaller homes saved 29% or £118,000 in 2023, and those downsizing by three or more bedrooms saved an impressive 53% on their next purchase.
There's some regional variance in this of course, expectedly London downsizers could potentially release up to £1,062,087 by moving from a five-bedroom to a three-bedroom home. However, in the North East, downsizers can recoup up to 65% of their five-bedroom property value, the highest percentage of any region.
So how to take advantage of this?
Targeted marketing is of course a first place to start, and there are plenty of direct mail systems out there, the one we use allows us to filter by age, length of residency, council tax bands, and even has a socio-economic filter for 'downsizers', which is handy!
Its a bit of a broad brushstroke to think of just traditional/print media though, when we examine our audience on Facebook especially, our highest reach and engagement scores are with women over the age of 65, so this is clearly the 'platform' of choice to target downsizers with.
Having a premium offering is key, the whole point is they are in big, expensive homes - and typically want an estate agent that is not only high-service but one that has a brand in keeping with theirs, and their houses, status relative to the market.
Quite often the 'empty nesters' haven't modernised their property in recent years (again, this is a sweeping generalisation, but its true more often than it isn't!) so some creative and low cost staging and styling services help a property become either more modern or neutralised, so as to appeal to a wider audience.
There can often be a lot of emotional ties to the family home, especially if the kids have grown up and left, and with that comes, typically, a lot of 'stuff'. The thought of the physical, and emotional, process of sorting this out can deter potential downsizers from taking the next step, so we often engage with de-cluttering services, who take a sensitive, practical approach to condensing what could be decades of accumulated items.
The list goes on...
The social, political, cost of living and market conditions all suggest downsizing is an area to give some serious consideration to in the short and medium term, and with larger properties and more personalised service naturally comes higher fee levels. Hopefully this article has given some food for thought as to how an up-tick in down-sizing can be a rich seam for your estate agency.
Sources:
[1] https://www.hamptons.co.uk/articles/downsizers-take-centre-stage-in-the-2023-housing-market
[2] https://www.landlordtoday.co.uk/features/the-big-issues/2024/08/massive-scope-for-downsizing-reveals-rightmove/
[3] https://www.savills.co.uk/insight-and-opinion/savills-news/357122-0/downsize-to-upsize-your-retirement
[4] https://www.reallymoving.com/property-market-insights-trends/downsizing-home-moves-by-uk-regions
[5] https://www.theguardian.com/money/2024/apr/13/saving-uk-downsizing-home-mortgage-costs-property
[6] https://www.jackson-stops.co.uk/articles/the-downsizer-gap-where-it-pays-to-be-a-downsizer
[7] https://apex27.co.uk/estate-agency-blog/is-downsizing-the-new-upsizing
[8] https://apex27.co.uk/estate-agency-blog/downsizing-and-what-it-means-for-the-market
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