May 2017 - The Rise & Rise of Downsizers
By Rich Harvey, Managing Director propertybuyer
The May budget has created some good incentives for downsizers to consider moving and inject more money into super. Find out how this works and the key things you need to look for with downsizing.
I’m sleeping rough on the streets in June to raise money for homelessness – please sponsor me so we can help those less fortunate. And check out our latest suburb profile at Wareemba – a nice hideaway suburb tucked into the Inner West. Enjoy the read!
This May update includes:
- The Rise and Rise of Downsizers
Watch propertybuyer's May Market Update here, or read below.
1. The Rise & Rise of Downsizers
There comes a time in one’s life when you realise that you want a change of address, a change of circumstance and you don’t want to mow the lawns every second weekend anymore. Perhaps the kids have reached an age of independence and moved out (or one or two are still hanging around). Perhaps you don’t need to be near the school zone and you want the café culture lifestyle or a suburb with more action. Perhaps the maintenance is just getting a bit too much and you want less rooms to clean.
Whatever the reason, downsizers are voting with their feet and making the switch to quality properties in premium lifestyle locations. There is also a large generation of 5.6 million baby boomers that coming to retirement age. By the year 2030 all baby boomers will be aged 65 or over!
In Sydney we often see a trend of downsizers moving from the Upper North Shore, The Hills District or the Inner West to their coastal cousin locations of the Eastern suburbs beaches or Northern Beaches area. Typically these families have grown up in large family homes with 4 to 5 beds, sprawling gardens and large rumpus rooms. But with age comes change and the only time the rumpus room is now used is for the annual Christmas gathering or storing big things the kids never want to throw out.
There is also a trend of downsizers staying in the same suburb, and relocating to an apartment, villa or townhouse as they have a strong established social network in the area and don’t want to move away.
Why downsizers are delaying moving
Many people are delaying downsizing for a host of reasons.
- The hassle factor – It takes a lot of de-cluttering, sorting, tossing, cleaning up and dealing with decades of memories when you decide to sell the family home. Some delay selling because this process seems just too hard and it’s easier to stay put.
- There’s nothing available – Others try looking, but they just can’t find the ideal property. In many suburbs there is a severe shortage of medium density options for downsizers.
- Stamp duty impost – Buying a $2m property will cost you $95,490 in stamp duty. This is considered a serious impediment to moving by many downsizers. For a little over $100,000 they could build a nice two bedroom granny flat in the back and move into that!
- Property market uncertainties – Downsizers will be asking “is now a good time to sell or not?” The market is constantly changing in response to economic forces and it’s hard to keep up to date.
Budget incentive for downsizers
To encourage downsizers to move from the oversized family home, the federal government introduced a special measure for individual downsizers aged 65 and over who have lived in their home for at least 10 years will be able to make a non-concessional contribution of up to $300,000 into their super from the proceeds of their sale. Couples will be able to contribute $600,000. This will apply from July 1, 2018. This measure applies even if an individual has reached the $1.6m cap in a private pension. Any amounts over $1.6m will be placed in an accumulation account where earnings are taxed at 15%. This is an attractive measure for those that are wanting to top up their SMSF accounts and also look at downsizing options.
Challenges for downsizers
When thinking about downsizing, many of the clients we have spoken to in the past talk about how overwhelming the process appears. The property market has changed dramatically since they last bought a house. Both prices and the way real estate is bought and sold has also changed. Buyers agent were not really heard of in the 70’s, 80’s and 90’s but have since become an integral part of the buying process.
Downsizers also talk about their large furniture and worry that their dining table won’t fit into a unit. Or the blokes worry that they won’t have a garage to tinker around with projects. Where will the grand children stay? How will we all fit in a smaller place for Christmas? Are there good medical facilities nearby? How far away are the shops? Will there be enough storage?
Opportunities for downsizers and What to look for
If you are at the stage of considering downsizing, here’s a few helpful tips to get you thinking:
- Start planning early
- Sell stuff you don’t need on gumtree, garage sale or give away to charities
- Get professional help in de-cluttering if you need it
- Get your property ready for sale and consider styling to attract the best price
- Now is actually a great time to sell because the market is still buoyant
- Think about your social network and lifestyle needs and choose a suburb that you believe will deliver the right mix
- Engage one of our buyers agents to help you find the ideal property and negotiate the price (this can save months and months of work and makes the process much less stressful)
- Look for boutique style properties in medium density complexes
- Always go for low maintenance options
- Consider an extra room for guests or a study
- Inspect the property at different times of day to confirm it has sufficient light and aspect and is not at the bottom of a gulley.
Downsizing is a great chance to start fresh and redefine your lifestyle. Embrace the opportunity and the positive changes that it can bring.
Getting a leg up
To get professional help choosing the right selling agent and then planning your next property purchase for downsizing, talk to my friendly team of buyers agents today. We have a fabulous array of people that can assist you and make the process an easy one, rather than it being a daunting task. Call us today on 1300 655 615 or contact us via this enquiry link.