The race for space within the housing market is running alongside an increasing “crawl to small” wherein homeowners look to downside as opposed to upsize, new research has revealed.
A survey of 2,000 people by Opinium for Hargreaves Lansdown in April 2022 found that people aged 18-24 are more likely to downsize than upsize, as are those aged 55 and over.
The desire to downsize doesn’t stop there: over one in 10 people aged 18-35 are also planning to downsize. That said, those aged 25-44 are more likely to be moving up the property ladder than down it.
The variation in whether a homeowner is planning to upsize or downsize also seems to be linked to their rate of tax, with the figures showing 27% of higher rate taxpayers are planning to upsize, compared to 5% of basic rate taxpayers. What’s more, 14% of higher rate taxpayers are moving area, compared to 7% of basic rate taxpayers.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, commented on the findings:
“The race for space is being won by the better paid, while younger people are starting the ‘crawl to small’. At the moment, with lockdown savings still kicking around, and some wiggle room in the budgets of higher rate taxpayers, some people can still afford to keep climbing the property ladder. However, as the cost-of-living bites, there will be plenty more who end up dropping back a rung or two instead.”
Coles went on to explain the “crawl to small”:
“Moving into a smaller property is seen as the preserve of retired people looking for extra cash, but this year the biggest downsizers will be those aged 18-34 – more than one in 10 of whom plan to move into a smaller and cheaper property.
Part of this is because young people are almost twice as likely to move as other age groups. One in five people say they’ll move house in the next 12 months overall – compared to around two in five of those aged 18-34. However, young people aren’t just downsizing more compared to other age groups – those aged 18-24 are also more likely to downsize than upsize.
In some cases, this will include those gaining their independence, who can’t afford anything like as much space as their parents. It’s also why people in this age group are overwhelmingly more likely to be planning to move area, to somewhere they’d like to live rather than somewhere they had no choice over.
However, 12% of those aged 24-35 are planning to downsize too. This will include some who move out of the family home later, but also young renters who are being forced to downsize by rising rents – especially if they’re simultaneously trying to save for a home themselves. It will also include those who eventually buy, and may have to downsize again to get onto the property ladder.
One in 10 in this group will move areas too, as will one in 10 renters. Part of this may be a move further afield to be able to afford more space now that hybrid working is becoming more common. However, a major part is also likely to be a move to a more affordable area in order to avoid paying more rent or downsizing in a more desirable area.
This survey was carried out in April, when rises in the cost of living had just started to bite, so there’s little sign of price rises moving the dial significantly at this stage. However, as time goes on, more landlords hike rents, and prices keep rising, this will have a more far-reaching impact. We expect more people to consider downsizing across the board or moving somewhere more affordable as we go through the year.”
On the impact that this will have on the race for space, Coles added:
“Overall, the race for space has started to wane. We’re less likely to be considering upsizing than any time since the onset of the pandemic, and while it’s not a dramatic drop, it’s worth keeping an eye on this figure as time goes on. In part, this is likely to be because more of us have spent the pandemic settling down in our forever homes. The number who say they have no plans to move has risen slightly in the past 12 months.
The only group with significant numbers still taking part in the race for space are higher earners, with more than a quarter planning to trade up in the coming year – compared to one in 20 basic-rate taxpayers. They’re also twice as likely to be considering moving areas, which owes much to the rise of hybrid working among this group, which leaves more of them considering a move further from work, where they’ll have even more room to roam.”
