Property Downsizing Stalls as Children Stay Put

13 April 2017

The average price gap between traders-down selling and buying back into the market is €345,129, according to a new report from property consultants, Savills Ireland. However, despite the sizeable surplus that can be unlocked from downsizing, trading-down has fallen sharply as a proportion of Savills housing sales – from 13.4% in 2014 to 5.3% in 2016.

According to Dr. John McCartney, Director of Research at Savills Ireland, there are three reasons for this;

“Firstly, adult children are taking longer to fly the nest due to high house prices and rents. New Census figures show that, despite an overall decline of 87,282 in the number of 20somethings since 2011, the number of couples living with children aged 20 and over has risen. Conversely, the proportion of older people living alone has fallen as their grown-up children stay longer at home. This trend is particularly evident in less affluent areas where family money may not be available to help young adults onto the housing ladder.”

Secondly, with house price inflation accelerating, the expected opportunity cost of trading a valuable asset for a less valuable one has increased. According to McCartney this is making potential downsizers reluctant to trade-down;

“House price inflation has been picking-up since the Autumn of 2015 and this is expected to continue because of rapid population growth, lagging supply and recent Government measures such as Help-to-Buy and easier mortgage lending rules. Owners of more valuable assets obviously stand to benefit more from a rising market, so it should be no surprise that some potential traders-down are opting to hold on rather than sell.”

The final, and perhaps most obvious reason for the declining trend in downsizing, is that the quality of trade-down stock has not been sufficiently attractive to entice traders-down out of their existing homes.

However, according to the report, where suitable stock is available the demand is very strong. David Browne, Director of New Homes at Savills Ireland, commented:

“For suitably designed mid to high-end apartment schemes in the right village locations, the demand from traders-down remains strong. In the past 18 months, schemes such as Embassy Court and 31 – 33 Merrion Road in Dublin 4, have sold strongly. Astute developers are responding to this and we should see the quality of trade-down stock ramp up significantly over the next 12 months.”

 

Read the full report here

 
 

General Enquiries

Savills Dublin Commercial

 

Key Contacts

John McCartney

John McCartney

Director
Research

Savills Dublin Commercial

+353 (0) 1 618 1427

 

Andrew Smyth

Andrew Smyth

Head of Marketing & Communications
Marketing & Communications

Savills Dublin Commercial

+353 (0) 1 618 1479