Sydney’s property market is surging right now, with the median dwelling price rising an incredible 9.3% over the past three months, according to CoreLogic.
But despite prices rapidly heading north, these could actually be the perfect conditions in which to downsize. We explain why.
How downsizers drive the market in our local area
Downsizers are a real force in our local property market. And why wouldn’t they be? The eastern suburbs offers so many of the characteristics downsizers look for when choosing a new home, especially when it comes to offering a convenient and connected lifestyle. Where else can you find such vibrant bars, cafes and late-night eateries, as well as world-class beaches and parks within such close proximity to the CBD?
While downsizers come in many shapes and forms, they tend to skew older than other buyers. More often than not, they’re mature couples or individuals whose kids have grown up. With more space and more isolation than they’d ideally like, they’re looking to sell the family home and move somewhere – often smaller – that gives them a walkable, lock-up-and-leave lifestyle. More often than not, this means a spacious apartment, terrace or townhouse close to the action.
The growing gap between properties
Today’s market boom is disproportionately affecting house prices, as opposed to units. In fact, since the start of the year, the average house price has lifted 15.1% while the average unit price has risen 6.5%, according to CoreLogic. This means buyers looking to downsize from the family home to an apartment could find they have more money to spend.
For instance, say your home was valued at $2.5 million at the start of the year and you were looking to downsize into an apartment worth $1.5 million to free up $1 million in equity.
You could now expect your family home to be worth $2,877,500, while the same apartment’s value would have risen to $1,597,000 – a gap of $1,280,000. That’s $280,000 more to put towards your retirement or use elsewhere.
Of course, this is just an example based on median value and the specific amount you can expect to receive or pay for a property will vary. But it gives you some idea of why a rising market such as this one can often be a great time to downsize.
The downsizer super scheme
The other reason that now could be the perfect time to make a move is that the government is actively looking to encourage downsizing to free up housing stock.
The main way it’s doing this is to allow some downsizers to make a tax-free contribution of up to $300,000 into their super from the proceeds of selling the family home. Better still, this is an individual cap. So, if you’re downsizing as a couple, you could potentially contribute up to $600,000 into your joint super, and receive the favourable tax treatment that this brings.
Until now, this scheme was limited to people over the age of 65. However, the government used Budget 2021 to announce that it would be extending the scheme to anyone aged over 60. That means you could still be a reasonable way out from the official retirement age but have the opportunity to turbocharge your retirement nest egg.
How to downsize in a rising market
Chances are you’ll have no problem selling your property in today’s market – potentially for a very good price. So the most difficult part of the downsizing puzzle right now can often be securing the right property. After all, there’s usually a lot of competition from other potential buyers.
So that you know you’ll have somewhere to move to, in a market like this one, I often recommend buying first and selling second. If you’re worried about holding two properties at once, you can always try to negotiate a longer-than-usual settlement period on the home you buy.
I also tell buyers to be decisive. If you can’t make a quick decision, your chances of securing a property are much lower. So do your research, look at lots of open homes and work out what’s important to you. That way, when the right property comes along, you’ll recognise it and be ready to act.
What your money buys you in our local area
We’ve recently sold a lot of great properties around our area that would suit many downsizers. Here’s a taste of what you can expect if you’re looking to downsize today.
226/50 McLachlan Avenue, Rushcutters Bay. Exuding a refined luxury, this exclusive two-bedroom apartment in the Advanx complex represents inner-east living at its finest. It sold for $1,980,000.
188B Victoria Street, Potts Point. This spacious, tri-level penthouse offers three generous bedrooms and feels like your own terrace. It sits in a development of just four properties and sold for $2,075,000.
304/14 MacLeay Street, Potts Point. From its elevated third floor position in the prestigious Pomeroy building, this two-bedroom apartment has enviable city skyline views from its substantial indoor/outdoor balcony space. It sold for $2,100,000.
8/15 Billyard Avenue, Elizabeth Bay. Set high in the gorgeous ‘Clanricarde’ building on dress circle Billyard Avenue, this two-bedroom apartment offers views across Sydney Harbour. It sold for $2,400,000.
1/4 Billyard Avenue, Elizabeth Bay. This exceptional three-bedroom waterfront apartment features an uninterrupted vista across Sydney Harbour. It sold for $3,350,000.
22/22 Wylde Street, Potts Point. This three-bedroom harbour view home in the ‘Winten’ building offers indoor-outdoor living and high end finishes in one of our area’s premier addresses. It sold for $7,050,000.
Contact us today if you’re looking to downsize in Potts Point and the eastern suburbs.