The most common option for those downsizing last year was to sell a detached house and buy a bungalow.

January 23, 2015

Homeowners could raise windfalls of more than £100,000 by downsizing from a detached home to a smaller property, research showed today.

People who sold a detached house and bough a bungalow, the most common option for those trading down the property ladder, unlocked an average of £103,715 in 2014.

Homeowners who traded a detached property for a semi-detached one were able to raise even more money at an average of £121,686, according to Lloyds Bank.

The windfall people can make by moving into a smaller home has increased by 8 per cent during the past decade, with downsizing from a detached home to a bungalow now unlocking £8,081 more than in 2004.

Unsurprisingly, those trading down the ladder in London stood to make the biggest gains at an average of £289,927 for people swapping a detached property for a bungalow, while switching to a semi unlocked £237,614.

Windfalls were also high in the south east for those who traded a detached home for a semi-detached one at around £191,955.

Even in Northern Ireland and Wales, where the amount of cash that could be unlocked under the above scenario was lowest, average gains of £70,669 and £91,244 respectively could still be made.

Downsizing continues to be a key driver of the property market, with 52 per cent of homeowners who planned to sell a property in the next three years saying they wanted to move to a smaller home.

Among these, just under two-thirds said they wanted to find a new home that better suited their current circumstances, while 40 per cent wanted to reduce their bills and outgoings and 28 per cent were looking to release equity from their property.

A further one in four people said they wanted to use the money they made to support their retirement plans.

The average downsizer is 56 years old and has lived in their current home for between 11 and 20 years.

But a quarter of those who plan to buy a smaller property said they were doing so sooner than they had expected, with reasons for this ranging from health to a change in relationship status to needing to be closer to amenities.

Andy Hulme, mortgages director at Lloyds Bank, said: "Downsizing is clearly still a major part of the housing market with over half of potential home movers 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."

Downsizers in the south west have seen the biggest increase in their windfalls in percentage terms since 2004, with the amount of cash they could unlock by moving from a detached property to a semi rising by 18 per cent.

But at the other end of the scale, a similar move in London would now yield 12 per cent less than a decade ago.

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