Market conditions are favorable for downsizers, which could lead to more empty nesters in the future.
Raine & Horne executive chairperson Angus Raine said empty nesters are starting to make a move to keep up with the favourable conditions that make it ideal for them to sell.
“The strong returns produced by property markets around Australia have clearly provided empty nesters with the incentive to make a move,” he said.
The Australian housing market experienced a 22.1% increase in house prices over the past year. This unprecedented growth rate is unprecedented in over 30 years.
“Downsizers realise they must sell up to capitalise on this terrific growth probably even more than other vendors,” Mr Raine said.
Recently, a freestanding house in Strathfield, New South Wales was sold — this was the first time that the house has changed hands since 1962.
“I have never seen in my 35 years in real estate more properties selling for the first time in 40, 50, 60 and even 80 years,” Mr Raine said.
Positive news for downsizers
Raine stated that empty nesters can also sell their main residence to increase their retirement savings. This is especially true for people who are paying downsizers into superannuation.
Announced during last year’s federal budget, eligible individuals aged 60 years or older can choose to make downsizer contribution into their superannuation of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home starting July this year.
This feature was unavailable for Australians aged 65 and over.
“Taking advantage of downsizer super contributions is not only a fantastic way to turbocharge retirement savings tax effectively, but empty nesters can make a community contribution by freeing up their larger family homes for the next generation of upgraders,” Mr Raine said.
Michael Sukkar, Assistant Treasurer for Housing, and Housing Minister, stated that the new superannuation policies will allow older Australians more financial freedom.
“This may encourage more older Australians to downsize to homes that better meet their needs, ultimately increasing the supply of larger homes for young families,” he said.
Top Tips for Downsizers
Mr Raine said one of the top considerations downsizers need to take is the amount of space they need — a smaller living area and up to two bedrooms would be ideal for them. This will dictate how much space downsizers are able to move.
“Consider what kind of property you want to move into and account for the costs associated with living there such as stamp duty, body corporate fees/strata levies, utility bills, council rates and insurances,” he said.
It is important to consider the location. This could be determined by several factors.
“This could mean staying in your current neighbourhood and moving into a smaller property such as an apartment or townhouse, a tree change, a sea change or even relocating interstate,” Mr Raine said.
Raine said that downsizers should ensure that their property is appealing to potential buyers when they sell their home.
“The sale of your family home may be full of memories which can be difficult to let go — however, you only get one first impression with every potential buyer therefore decluttering furniture and other trinkets can create a greater sense of space and help keep the property neat,” he said.