Londoners cash in on house prices

One in three Londoners moving home are downsizing their properties, new research shows today.

Most of the sellers say they simply want to realise their assets so they can enjoy a more relaxed pace of life.

But Jim Buckle, the managing director of assertahome.com, which commissioned the study, warned that the trend was making life even more difficult for first-time buyers. "Downtraders are now competing with both first-time buyers and buy-to-let investors at the lower end of the market," he said. "This is helping to keep out the former and pushing prices higher for the latter."

The rush to downsize has been encouraged by the recent rises in mortgage interest rates, which have caused some people to worry about repayments.

Another spur to trading down - especially for older people - is the recent pension crisis which

means that some older people have no choice but to release cash from their family home to supplement a diminishing income.

The situation in London is being reflected across Britain - but outside the capital the average financial gain is only £112,000. The survey identified four key groups of people trading down:

Mr Buckle said those trading down the property ladder were often overlooked. He added: "We were surprised to find how many people are trading down for a better quality of life. Britons are clearly far more likely to make radical lifestyle changes than ever before, probably because they will now have so much more to gain."

Another report out today suggests that the downsizers may be making a smart move. Analyst Datamonitor warns that people who are relying on property to provide them with a retirement income could be left high and dry if the market crashes.

It said people are increasingly seeing property ownership as a "get out of jail free" card, viewing it as a new pension.

But experts said the strategy was high-risk as property values could not be guaranteed to keep rising.