Homeowners over the age of 65 could unlock an average of £129,000 by downsizing to a smaller property, with the majority of locked-up housing wealth in the South East.

According to analysis from Savills, which used housing data from the English Housing Survey, there are around 3.6 million homes in the UK owned by over 65s with at least two spare bedrooms.

If homeowners downsized to smaller properties then an average of £129,000 could be unlocked, ranging from £59,800 in the North East to £239,200 in London.

Around a quarter (23.7 per cent) of these under-occupied properties were located in the South East, where the average amount that could be unlocked was £171,100.

This was followed by London at 17.1 per cent and East of England at 14.2 per cent.

Over-65s ownership on the up

The research said that the number of householders owned by those 65 and over had increased by 27 per cent over the last 10 years to 5.45 million, with 94 per cent owning the homes outright.

It added that two thirds are underoccupying their homes and the value of the underoccupied housing stock was almost £1.47bn.

Lucian Cook, head of residential research at Savills, said that traditionally older homeowners were reluctant to downsize due to attachment to former family home, lack of financial incentive and limited supply of good quality retirement accommodation.

He noted that the English Housing Survey showed that only three per cent of homeowners over the age of 65 were unhappy with their current home and just over a third (36 per cent) of movers were looking to move to a smaller or cheaper property.

Cook said that as the costs of running a home were increasing rapidly, the financial benefits of downsizing would come to the fore over the next 12 to 18 months and this would “outweigh the feared upheaval of a house move”.

“Longer term, if we are going to make more efficient use of our existing housing stock, there needs to be a change in attitudes to downsizing, not just among individuals but also among policy makers.

“While most of the focus of housing policy is about getting younger generations on to the housing ladder, arguably much greater focus should be given to the provision of retirement housing that better suits the needs of active downsizers and that the older generations aspire to live in,” Cook explained.