An increasing number of relatively young ‘pre-retirees’ with small or no mortgages are selling up their houses and moving into urban flats. Nigel Lewis finds out why
Words Nigel Lewis
If you are in your 50s, approaching retirement and living in a large house long emptied of dependent offspring, then you may be thinking about downsizing. It’s a trend that has been gaining momentum recently as an assortment of social, financial and family factors have conspired to persuade many parents to use their equity to help their children on or further up the property ladder. According to research by Savills, across the UK two-thirds of all housing wealth is tied in homes owned by retirees and approximately 55,000 people downsize each year, releasing equity of some £7 billion.
In London, this equity comes in very handy. The capital’s shockingly high average price for first-time buyers – currently running at £462,600 according to online agent eMoov – means even relatively well-paid professional couples in London struggle to get on the ladder. This has created a two-tier trend of downsizing among their equity-rich parents, who have been realising that the large unmortgaged houses they live are one way to help their children out.
These downsizers fall into two categories – those moving in from the countryside to the bright lights, and those already living in London. Those moving in from outside number approximately 14,000 people every year, according to exclusive research carried out for Absolutely London by Hamptons International. It also says that the most popular outer boroughs among inbound 50-somethings are Richmond upon Thames, Croydon, Havering, Bromley, Sutton and Bexley while the most sought-after inner boroughs are Kensington and Chelsea, and Westminster.
“While London has long been a magnet for the young, in the last three years the number of over 50s moving to the capital has risen 9%,” says David Fell, a research analyst at Hamptons International. And he says an increasing number of outer London developments are therefore now being marketed at older buyers as “house builders look to capture a slice of the growing grey-pound,” he says.
But not everyone is inbound from the sticks. Many older home owners already living in London are downsizing to release equity for children or their pension planning, but also to be nearer children and grandchildren. Developer St James puts some astonishing figures on this emerging market. It reckons that there are nearly half a million over-55s living in Greater London who own houses with three beds or more.
“Many older buyers are looking to make a move from the suburbs to retire to the city, to downsize to a new home in a central, well-connected location without having to compromise on design,” says Sean Ellis, Chairman of St James.
“Private developments are well-suited to fulfil the lifestyle needs and aspirations of today’s retirees – and as such more are taking advantage of the broader choice on offer.
“At Albert Embankment, we’re creating three schemes of extraordinary quality, offering thoughtfully-designed homes with on-site leisure amenities, 24-hour concierge and security, against a backdrop of globally recognisable views across Houses of Parliament and the London Eye.”
One word developers mention less often these days is retirement. It’s a concept that in London is less fashionable, partly because many over 55s don’t see themselves as retired.
Last year research by the Department of Work and Pensions found that only 17% of those over 50 were planning to stop work completely and that 39% thought to work flexibly or part time would be the best way to retire.
One of the few developments that does pitch itself as a ‘retirement’ one is Chelsea Island, where sales director James Taylor of Hadley Property Group says that the desire to downsize “is perhaps the biggest trend we see with retirees”.
“At Chelsea Island, we’ve noticed strong interest from the over 60s who are keen to have the best of both words: the dynamic city lifestyle in a contemporary apartment.
“This trend is particularly noticeable with families in the suburbs, where the children have now flown the nest, and the parents are left with a substantial home and high maintenance garden to take care of.”