Around 12% of homeowners in Australia will downsize over the next twelve months and in the current property climate, an increasing number of vendors will sell off-market. There are many reasons why people choose to downsize. For some, the family home becomes too large and hard to maintain once they start to age; some are searching for a simpler lifestyle once the kids leave home; some do it to save money or to release equity for their retirement, and some are “rightsizing”, i.e., swapping their home for a luxury apartment or villa that is serviced for more comfort.

Clearly, reasons for downsizing your home depends on ones personal circumstances, and while some leave the city and move out to regional areas for a quieter, more affordable lifestyle - a "sea" or "tree change", perhaps - others remain where they are to stay closer to family and friends, but move into smaller properties such as apartments, townhouses, or over-55 complexes.

Downsizing your home - COVID has complicated this decision 

Since the pandemic reached our shores, other factors have affected the downsizing decision for some middle-aged and senior property owners. COVID forced many adult kids back to the family home during the lockdowns and others have moved back to save deposits for their own properties. Now we have more flexible work options, some homeowners are choosing to work for longer.

Few people really think about downsizing until they must, i.e., until they are ready to give up work and change their lifestyle. But the decision for most - and some people contemplate it prior to the state retirement age - is based on the release of their equity from their property to give them a financial buffer in retirement.

There are two main factors to consider before downsizing: the financial implications and the assurance that the decision will improve your lifestyle in some way.

What practical considerations should you take into account when downsizing your home?

We've listed some of them below:

1. Cost  – Moving isn’t cheap, once you factor in fees, removal costs, marketing, and stamp duty. This is why businesses like ours endeavour to reduce some of the costs associated with the selling process.
2. Location – There’s no point in moving unless your new lifestyle is an improvement in some way and is financially sustainable. Consideration should be given to the proximity of your new property to amenities and public transport as your mobility may change as you get older.
3. Selling – Although the preparations required to sell your home may initially appear overwhelming, the right team of professionals can help remove a lot of the stress. Our Seller Assist service takes out the hard work, worry and uncertainty from the process.
4. Decluttering – A smaller floor plan requires less “stuff”, so a good clear-out will be imperative before you move and may require some painful decisions about what stays and what goes.
5. Accessibility  – Homes at the top or bottom of steep drives will probably not be practical as you age, and neither will stairs. Ideally, a ground-floor apartment or a block with a lift makes more sense, but if you do fall in love with a small home with stairs, check out its suitability for a stair lift in the future.
6. Maintenance – A newer, smaller home is much more practical from a maintenance perspective, and fortunately, there are an increasing number of over 55 developments being built. While many older people like the idea of pottering about in the garden, the maintenance they require long-term is something worth considering as the maintenance will eat into your savings if you must hire someone to do the work.
7. Functionality – Safety is an important factor to consider. For seniors, the apartment should be ground floor or serviced by a lift and in smaller homes or townhouses, they may want to check out the safety of the stairs, i.e., that they are not too steep and have a sturdy handrail. As people age, they develop balance and coordination issues, so their new home needs to meet those additional needs. Something else to think about is whether you need an extra bedroom or home office if you are still working in some capacity or if your adult kids are likely to return home for long periods of time. And trust us, they will!
8. Building management – If you buy a unit, check out the body corporate and even a copy of the strata report for any additional annual levies you are likely to incur so you avoid any surprise bills for building repairs or upkeep.
9. Neighbours – It may be obvious, but it doesn’t hurt to check out the age demographic in the building, so you don’t end up living next to "party central".
10. Budget - Work out a budget and stick to it. There is no point in downsizing unless you recoup some equity from your existing home. You don't want to find yourself in a position where you must carry on working to sustain the lifestyle you envisaged for your retirement.
11. Plan ahead – Jonathon Fletcher of Cunninghams says, “It can take years to understand your personal needs as well as the current market that you are buying and selling in, so, the most prudent thing you can do is to have a plan. I would encourage downsizers to seek advice and start planning 1-3 years ahead of the big move, to make the transition as seamless and successful as possible.” 

And the financial considerations?

Before you make a decision about downsizing your home, ask yourself the following questions?

Do I really need to downsize? According to Forbes, many people are changing their minds about downsizing since COVID, the return of their older kids to the nest and the introduction of more flexible working conditions. Clearly, there is a financial and emotional cost to moving house, but there is also no denying that downsizing should save you money - on bills and maintenance – and a lot of potential stress in the future in terms of upkeep when you travel. However, if your children are still not permanently settled or you are still working, it may be too soon to make the decision.

Should I pay off my mortgage? Many people question whether to pay off their mortgage with the release of the equity from their home because loans can be an added source of stress in retirement. Hopefully, the increase in value in your existing home should give you enough equity to do this when you downsize, and leave you a buffer to add to your super or improve the quality of your life in other ways. And another benefit of paying off your mortgage is that you become a cash buyer and in a better position to bid for your next property.

Is there another way to fund my retirement? Yes. Many homeowners are renting out rooms or renovating their existing homes to create separate rentable accommodations for additional income streams.

Downsizing your home may not be an EASY decision but it is a PRACTICAL decision for many 

The process is proving more challenging now that COVID has added complications to the way families live and property owners are starting to feel the strain of the current buyer’s market. But overall, moving somewhere smaller makes sense for most of us who have worked hard our whole lives and are ready to enjoy a simpler, more secure retirement lifestyle with, perhaps, a little icing on top. 

If you are looking to sell your property, Listing Loop provides three options instead of the traditional one way.

If you would like to use the proven and most common method of selling with an agent, but don’t know where to start, our free Seller Assist service can help. Seller Assist identifies the best local agent to sell your property who will value your property correctly so you don’t undersell.

If you’re up for giving it a go yourself, Listing Loop can guide you through the process of selling privately. This includes listing your property for sale on Listing Loop and the option to have marketing products such as a For Sale signboard and a property brochure.

If you’re interested in selling, but not ready to fully commit, you can Test the Market for free. List your property unofficially to determine buyer interest. You can do this without even revealing your address or contact information.

Explore Listing Loop’s options for selling and importantly, list and sell your property with confidence.