A nationwide survey of estate agents revealed a growing demand from clients looking to downsize to raise cash, with two out of three (66%) reporting a rise in enquiries over the past year.

The main reason clients want to downsize is to raise cash with 60% of estate agents saying customers want to boost retirement income, while a third say clients are looking to clear mortgages.

But 72% of estate agents say older homeowners have unrealistic expectations about the money they can make because a lack of suitable homes for downsizers is forcing up prices.

More turning to equity release

As a result estate agents are increasingly recommending equity release plans, which enable homeowners to access property wealth without paying interest and repay the loan when they go into care or die.

The research, carried about by equity release referral service Key Partnerships, found 42% of estate agents regularly recommend equity release plans as customers struggle to achieve the savings and extra money they are looking for from downsizing.

Some 85% of estate agents believe prices for suitable homes for downsizers such as bungalows, retirement homes and houses suitable for the less mobile are being pushed up by lack of supply.

Will Hale, director at Key Partnerships, said: “Downsizing is attractive for millions of older homeowners as part of retirement planning as it appears to promise tax-free cash and is clearly driving increased enquiries for estate agents.

“But older homeowners are struggling to achieve their financial objectives with the combination of rising prices and a lack of supply meaning that downsizing simply does not add up for clients.

“Estate agents are increasingly recognising that equity release is a real alternative which enables homeowners to stay in their home and raise cash but it should be part of all conversations with older homeowners considering downsizing, when for many the maths simply doesn’t add up.”