Retiring Britons are becoming more likely to downsize when they reach retirement, according to a report from financial company ING Direct.
This finding came from a study which surveyed 1,000 adults in twelve European countries, asking them about how they plan to fund their retirements.
The results showed that British retirees have become increasingly likely to say they are planning to downsize their home in order to free up capital which they need to top up their pension income.
In total, more than a third of the British respondents to the survey said they planned to use some of their housing wealth to help fund their retirement, compared to less than a quarter on the Continent. This probably reflects the strong culture of home ownership in Britain, which has seen millions of older home-owners enjoy substantial rises in their housing wealth over the last 30 years, while renting is still far more common in many other European countries.
The survey also found that older people are responding to the deterioration in their financial circumstances by planning to retire later. When ING Direct conducted a similar study in 2007, before the global financial crisis began, the average age at which people they surveyed in Britain expected to retire was 60. However, they found that this has now increased to 65.
This trend was not reflected across the Continent. Workers in France said they only planned to retire two years later than previously estimated, at 62, while those in Turkey were the most optimistic, with the average respondent there saying they still expected they would be able to stop working at 55.
One in ten British pensioners has already sold their house or downsized, according to the report’s authors.
IF welcomes the news that British people are becoming more likely to downsize, as we argued in our 2011 report Hoarding of Housing: The intergenerational crisis in the housing market that the shortage of new homes being built in Britain means that we need to extract more efficient use from our existing housing stock. The report highlighted a significant imbalance in Britain between housing size and household size (the number of people who live in a house) which downsizing helps to correct.
If we want to encourage further downsizing then Government policies could help, such as the establishment of a national downsizing agency, as well as tax breaks for people over the age of 65 who sell their homes. Although it seems to be on the increase, downsizing is still a relatively uncommon phenomenon in Britain compared to America, where one in five pensioner households downsize.