Quality over quantity – it’s one of the most compelling reasons why people of all ages choose to downsize their home.
If you’re taking the less is more route and planning on downsizing this year, here’s what you need to know.
The lifestyle benefits of downsizing
New research from the ABS for CommSec shows that Australian homes now hold the dubious accolade of being the largest on earth, with our average new freestanding houses now as big as their American counterparts. But many are pushing against the tide and opting to downsize. While we tend to exclusively associate downsizing with retirees, these days, young couples and families are also choosing the downsizer life over a large house in the suburbs.
Lower utility and maintenance bills, a more streamlined and minimalist lifestyle with a smaller carbon footprint, more time to spend on things other than household chores and maintenance, and the ability to lock up and leave when travel beckons are just some of the factors that make downsizing attractive to homeowners of all age groups.
When it comes to people over 55, research carried out by the Australian Housing and Urban Research Institute (AHURI) in 2020 shows that 27 per cent of downsizers were moving to a smaller home to enhance their lifestyle, while a further 27 per cent were doing so for financial reasons. Meanwhile, 18 per cent were selling up to unburden themselves of property or garden maintenance.
Downsizing in Sydney’s east means tapping into a vibrant lifestyle, with buzzing cafes, bars and restaurants, as well as proximity to the city, beaches and green spaces. It’s no surprise to hear that about 70 per cent of downsizers are choosing to move closer to the city or lifestyle areas, according to Domain.
How downsizing can boost your super
Since 2018 the federal government has been further sweetening the downsizing deal with their downsizer contribution scheme. The scheme allows eligible people to deposit up to $300,000 each (or $600,000 per couple) into their super from the sale of their home. Until now, you had to be 65 or older to qualify, but the government has announced it will lower the age of eligibility to 60 from 1 July 2022. If you or your spouse have owned your home for at least ten years, selling up and making a downsizer contribution may be an effective way to boost your super.
Things to consider when you’re downsizing
- What will you downsize to? Create a list of what you’re looking for in your new abode – after all, every downsizer’s dream home is different. Are you looking for an apartment, a terrace or a townhouse? How many bedrooms and bathrooms are you after? Is outdoor space, like a balcony, or a workspace, such as a study, a must-have? Do you have a preferred suburb, favourite streets or even particular apartment buildings that you especially like? Once you’ve narrowed down your search criteria, decide which items you’re prepared to be flexible about. Downsizing is just like any other property purchase, and you’ll likely have to compromise on some things.
- Should you buy or sell first? There’s no straightforward answer to this one, and it will depend on your individual circumstances and the state of the market. Selling first will release the capital you have tied up in your current home and give you absolute certainty about what you have to spend. On the other hand, in a rising market, like we saw in 2021, many opt to buy first before prices increase further. Experts are predicting more growth in the property market in 2022, albeit at a more subdued rate than we saw last year.
- Research, research, research. The more research you do, the better you’ll understand the market, and the better you understand the market, the more informed your decisions will be. Research can give you a sense of what your current home is worth and what the type of property you’d like to downsize to is selling for. The better informed you are, the more confident and decisive you’ll be able to be when the time comes to sell and buy.
What do downsizers need to know in 2022?
If you’re selling a house to make the move to an apartment, chances are you’re in a good position. Sydney median house prices grew 29.1 per cent over the course of 2021, while apartment prices only rose by 15.3 per cent.
This gap between house and apartment median prices reached an all-time high last year, which is good news for downsizers, and some will find themselves with a big cash windfall after making a move to a smaller home. However, others will be trading their large home for a similarly priced smaller property (or even one that’s worth more). There’s a big trend amongst downsizers for spacious penthouse apartments, terraces and townhouses in Sydney’s east.
Are you thinking of downsizing in Sydney’s east in 2022? My team and I help hundreds of people downsize in Potts Point and the eastern suburbs every year. Give us a call today.