However, estate agents believed that this idea was flawed as sellers were finding it difficult to find homes to buy.
More than two out of five estate agents (44%) have seen a rise in inquiries from older homeowners looking to downsize in the past year.
The majority (62%) of estate agents have warned that would-be downsizers have unrealistic expectations about how much they will raise from moving to a cheaper home.
More than half of estate agents (56%) believed that there was a shortage of homes on the market ideal for downsizers, while 68% cautioned that there were not enough homes available that were suitable for older buyers who were less mobile.
The research also found that estate agents were increasingly suggesting lifetime mortgages as another way for downsizers to raise money.
Some 44% of estate agents said they recommended equity release plans which enabled customers to take out money, while staying interest free in their home.
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The Council of Mortgage Lenders claimed that the housing market had “stalled” with the number of home movers falling by 9% during the last year.
Key Partnerships’ research also found that on average 16% of estate agents’ clients who were looking to downsize had either failed or given up in the past two years.
Will Hale, director at Key Partnerships, said: “When downsizing works, it can be an ideal solution for older homeowners, but sellers need to be realistic about how much they are going to make and it appears many are struggling to find suitable homes.
“The shortage of homes for sale is pushing up prices for downsizers who may struggle to raise the sort of money they are expecting to help with retirement planning, while also having to go through the upheaval of moving home.
“Equity release should be part of all conversations with older homeowners considering downsizing, when for many it simply doesn’t add up.
“Estate agents who can offer equity release as a potential alternative are able to benefit from an additional revenue stream by referring potential clients to a specialist.”