Home owners over 55 in selling frenzy

Your house may be your most valuable asset, but the question is when to cash in on that asset. Recent activity in the UK housing market suggests that home owners aged over 55 years old feel they have reached the stage in their lives when it’s time to release equity from their home. Let's take a closer look at this trend and the reasoning behind it.

The drive to downgrade

New research data shows that 41% of UK of home owners aged over 55 are planning to sell their home. This is a 38% increase on what the figure was six months ago, according to the bi-annual Prudential Downsizing Index. In doing so, they hope to boost their capital by an average of £85,300.

In most cases, these home owners do not intend to climb the property ladder, but are rather looking to cut their maintenance costs and move to a smaller property. Seventy-five per cent claim that they will downsize, with 61% claiming that their current accommodation is too big and 58% hoping for smaller, more manageable space.

That said, 34% do cite the prospect of significantly increasing their capital as their primary incentive for selling, though what they intend to do with that capital varies. Forty-five per cent want to use that capital to go on holiday – or make some other form of luxury purchase – rather than invest it. Forty-eight per cent intend to re-invest, or put the money into savings, while 40% are looking to increase their pension pots. Twelve per cent will use some of the money to help their children climb the property ladder.

Other sellers intend to put those funds towards a new property of their own, though in the majority of cases it's because they favour a change of scenery. Thirty-five per cent are planning to move to a new town or city in the UK, and data from the Census shows that Cornwall, Arun and North Somerset are especially popular destinations for those aged 65 and over, followed by Gwynedd and Eastbourne.

Too soon to sell?

Although selling your home is an effective way to increase your capital, and cutting your costs by downgrading is a tempting proposition, retirement income expert Vince Smith-Hughes urges home owners to think carefully before making such a move. Gradually increasing your savings from early on in your working life is still considered the most effective retirement plan. He also points out that the total costs of moving house can weigh significantly against the capital gained from selling your current home.

If you are considering selling your home so you can gain access to the capital for retirement-related needs, first ensure that you're not you're not overestimating the amount of capital you will gain from selling the property. With the new pension and retirement income options that became available in March 2014, it's all the more important to assess all your options. If in doubt, get professional property buying and selling advice from the experts at a Clicks and Mortar agency, such as Tepilo.

Get Started with Sarah Beeny's Tepilo now.