Think it's all retirees looking to step down the housing ladder? Not according to new research which shows younger people are being pushed into smaller homes.
Young people are four times more likely to downsize their home than 'Baby Boomer' over-55s according to research.
Around 12% of people aged between 18 and 34 think they will move to a smaller property this year, compared with only 3% of those aged over 55, according to IFA Hargreaves Lansdown.
The group believes many of the young downsizers are tenants who are being forced to trade down to smaller properties because they cannot afford rising rents, with 27% of young people planning a move currently renting in the private sector.
Others are likely to be first-time buyers who are being forced to downsize in order to be able to get on to the property ladder.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Generation Rent is being squeezed out of the property market and crammed into smaller and smaller homes.
“As rents rise, tenants may be forced to keep downsizing in order to keep a lid on costs. When they eventually buy, they may have to downsize again in some areas to get on to the property ladder.”
Why is this happening?
The trend for tenants having to downsize is being driven by the fact that average rents are rising faster than average earnings in some locations.
Meanwhile, tougher mortgage affordability rules mean many first-time buyers face limits on the amount they can borrow, even if their monthly mortgage repayments would be lower than the rent they were paying.
At the same time, older homeowners who want to downsize are being put off doing so because of the high costs involved, particularly from stamp duty.
Who does it affect?
One in six people plan to move in the next year, split equally between people who are downsizing, those who are trading up and people who are moving to a different area.
Leeds had the highest proportion of downsizers, with 16% of people living in the city expecting to move to a smaller home within the next year.
It was followed by Edinburgh at 12%, Brighton at 10% and Glasgow and London, both at 8%.
At the other end of the spectrum, only 1% of people in Southampton had plans to move to a smaller home.
What’s the background?
On a brighter note, young people were also the most likely to be planning to trade up the property ladder in the next 12 months, with 9% of 18 to 34 year olds expecting to move to a bigger home. This compares with 7% of those in the 35 to 54 age group and just 1% of people aged over 55.
Even so, the younger age group is still more likely to be moving to a smaller home than a bigger one.
While only 3% of older people have plans to downsize in the immediate future, 22% said they expected to do so at some point during their retirement, and 45% said they had not ruled it out.
Top 3 takeaways
- Young people are four times more likely to downsize their home than Baby Boomers as they struggle with stretched affordability
- Tenants in the private sector are most likely to be planning to trade down to a smaller property
- 22% of the over-55s said they expect to downsize at some point during their retirement, and 45% said they had not ruled it out