Homeowners looking to downsize are overestimating how much they will make from selling their property, a new study has revealed.
According to Key Partnerships, 72% of estate agents believe older homeowners have unrealistic expectations about the money they can make from downsizing.
While demand for housing is growing, the lack of suitable homes for downsizers is in fact pushing up prices.
As a result estate agents are increasingly recommending equity release plans as customers struggle to achieve the savings and extra money they are looking for from downsizing.
The main reason clients want to downsize is to raise cash with 60% of estate agents saying customers aim to boost retirement income while a third say clients are looking to clear mortgages.
Key’s research found 85% of estate agents believe prices for suitable homes for downsizers such as bungalows, retirement homes and houses for the less mobile are being pushed up by lack of supply.
Will Hale, director at Key Partnerships, said: “Downsizing is attractive for millions of older homeowners as part of retirement planning as it appears to promise tax-free cash and is clearly driving increased enquiries for estate agents.
“But older homeowners are struggling to achieve their financial objectives with the combination of rising prices and a lack of supply meaning that downsizing simply does not add up for clients.
“Estate agents are increasingly recognising that equity release is a real alternative which enables homeowners to stay in their home and raise cash but it should be part of all conversations with older homeowners considering downsizing, when for many the maths simply doesn’t add up.”
The research also revealed that 57% of estate agents say there is a lack of suitable properties for people looking to retire, while 63% say there are not enough bungalows available. Raising money is not the only reason people downsize however, the research shows. Around 48% want a home that is easier to manage while 21% want to reduce household bills.
Loading ...