Housing market: the race for space runs alongside a growing ‘crawl to small’

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown comments on Housing market: the race for space runs alongside a growing ‘crawl to small’

Figures from a survey of 2,000 people by Opinium for HL in April 2022

People aged 18-24 are more likely to downsize than upsize, as are those aged 55 and over.
Over one in ten people aged 18-35 are planning to downsize.
Those aged 25-44 are more likely to be moving up the property ladder than down it.
27% of higher rate taxpayers are planning to upsize, compared to 5% of basic rate taxpayers.
14% of higher rate taxpayers are moving area, compared to 7% of basic rate taxpayers.

Sarah Coles says:

“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.

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 ten 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 ten in this group will move areas too, as will one in ten 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.

The race for space

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. This is likely to be, in part, 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.”

	overall	18-24	25-34	35-44	45-54	55-64	65-74	75+
plan to downsize	6%	11%	12%	4%	5%	3%	3%	2%
plan to upsize	7%	10%	15%	13%	5%	2%	1%	1%
plan to move area	7%	18%	11%	12%	7%	3%	2%	1%
plan to move further down the line	18%	24%	16%	19%	23%	22%	12%	6%
no plans to move	62%	37%	46%	52%	61%	70%	81%	91%

	overall	Higher rate taxpayer	Basic ratetaxpayer
plan to downsize	6%	5%	4%
plan to upsize	7%	27%	5%
plan to move area	7%	14%	7%
plan to move further down the line	18%	13%	21%
no plans to move	62%	41%	63%

	April 2022	April 2021	April 2020
plan to downsize	6%	5%	7%
plan to upsize	7%	9%	8%
plan to move area	7%	6%	7%
plan to move further down the line	18%	20%	19%