Compare the Market Economic Director David Koch says the downsides of downsizing have been exaggerated.
Australia is a nation of property addicts. How often do you trawl real estate websites or spend a Sunday at Bunnings planning home improvements?
Every year millions of dollars are spent on renovations and we pour hours into repairs and maintenance. So it’s no surprise when we get a little attached.
We romanticise the purchase of our first home, then fantasise about upgrading to our dream second home, but when the time comes to make the third logical move to a smaller, more accessible home, it seems we’ve locked the door and thrown away the key.
Because our homes aren’t just four walls. They are the theatre of memories where our best and worst days are lived out—anniversaries, birthdays, kids, accidents, break-ups, the lot.
It’s enough to put us in property paralysis.
Beyond sentimental attachment, there are so many reasons why older Aussie homeowners decide to stay put.
Should I stay or should I go?
Moving can be a hassle – especially when we’ve got so much stuff. We have some of the biggest houses in the world and we keep buying stuff to fill the space. So when it comes to downsizing, decluttering can be a sizable effort.
Finding a new place can be extremely hard, and right now, supply of housing options falls way short of demand. The government’s failure to plan for our growing population has left many in a lurch.
And then there’s the cost. There are all the fees associated with selling your home, stamp duty and the possibility you might no longer qualify for the aged pension.
Sometimes the grass really is greener
Despite all that, I reckon that in many cases, the upsides outweigh the downsides when it comes to downsizing.
First, our big family homes are great when they are filled with family. But when the kids and grandkids are grown up, they’re often not worth all the work. Imagine the time you’ll save not having to mow a huge lawn or clean four bedrooms.
It’s a dilemma Libby and I are going through at the moment. Four children and 8 grandchildren (with another on the way), spread across Australia and overseas. We all love our family home and the Christmas ritual of everyone moving in… last year it was 16 people sleeping at home for 11 days.
We even have plans approved to add another 2 bedrooms and bathrooms. But now reality has set in… a huge renovation for just 2 weeks a year. Just doesn’t make sense.
Second, downsizing could help you top up a tax-free income stream. Downsizers can make a contribution of up to $300,000 into their super when they downsize their home. It’s a great boost, especially if you’re over the age threshold for making voluntary contributions.
While tempting to kick the can down the road, leaving the decision too late can be disastrous. If you are unfit to live alone, the burden on your loved ones could be enormous.
Compare the Market surveyed 1,000 Aussie homeowners in September 2023 and found about 39% were considering selling at some point over the next five years.
The most common reason for those aged 58+ was to downsize while respondents in their 20s and 30s hoped to find a bigger place.
I hope this could be a sign attitudes are changing. It may feel like closing a chapter but you’re also freeing up your home for a new family.
When the grandkids have grown up, and our backs aren’t what they used to be, downsizing could be the fresh start we need.
