The Rise Of The Downsizer - November 2022
November 3, 2022 / Written by Rich Harvey
By Guest Blogger, Mark McCrindle,
Director & Principal McCrindle Research
The peak downsizers are those aged over 65, particularly the 65-to-74-year old’s, of whom there are two and a half million in Australia. Even those in their mid-seventies have a life expectancy that will extend into their late eighties.
This demographic of downsizers are not moving into the aged care stage, but rather the downsizing stage. They have an average household net worth of $1.6 million, which is 60% higher than the average Australian household.
This is a large demographic with increased longevity, above average wealth, and aspirations to make the most of their post full-time working life stage.
What percentage of the population are currently in the downsizer demographic? Is there a wave coming?
Just looking at the 65-to-74-year-old bracket, that is 10% of the population, but if we include the over 75 population, that's another 2 million people.
The total of over 65s, of whom many would be downsizes, are more than 17% of the population. This is the highest proportion of over 65s that Australia has ever seen. While the numbers will continue to grow because of longevity gains and the size of the Baby Boomers, we are currently now experiencing the peak of the baby boom births hitting this downsizing life stage.
Many people in real estate refer to downsizers as having access to “old money" - how will this impact the downsizer in terms of their ability to buy higher quality and higher priced property?
This is the highest ever net worth generation of retirees in Australia's history. Most of their household wealth is tied up in the family home, but because of the size of their household wealth, as they downsize, it will unlock a lot of money to allow for the next property. It will also allow some money to be spent on lifestyle pursuits, holidays and upgrading their car even after they've downsized.
All up, the over 65s in Australia have a total national wealth of nearly $4 trillion. As they downsize, they will contribute not only to the largest property transfer in history but to the largest intergenerational wealth transfer as well.
What does the typical downsizer require when it comes to their property preferences?
For many of these Baby Boomers, while their empty nest homes are worth a lot, they are older properties, where these retirees have raised their children. The cost and efforts of maintenance is one of the key push factors to get them to downsize.
What they're looking for as they downsize, is a maintenance-free property that allows them to “lock up and leave” so that they can travel, spend time with their children and grandchildren, and pursue other activities and interests.
For many downsizers, the new places that they're moving into provide the first new kitchen, new bathrooms and new homes that they've ever had.
How will this impact the property market? Are developers becoming more attuned to the needs of downsizers? E.g. building larger 3 and 4 bed units? More disabled access? Luxury units closer to the shops etc.
This is a demographic that, as they downsize, are looking for lifestyle, but also thinking about their future needs. The trend in Australia is towards "ageing in place" so this demographic are likely to remain in these places as they age, and therefore the avoidance of stairs, the opportunity to retrofit bathrooms and walkways with railings and wide access for mobility purposes is something to keep in mind.
This demographic is also looking for extra space for the pursuit of hobbies, to have family members stay over, and indeed to store some of what has been accumulated in their larger homes.
Where do you think the downsizer market will want to live? Will they want a complete change of scene? Move out of the city to coastal towns like Byron Bay? Or does the statistics show they prefer to stay connected to family members and established social networks?
Typically, Australia's downsizing retirees have headed to those coastal retirement hotspots largely for lifestyle reasons. But there are more varied pathways now. The sea change remains strong, but so does the tree change, allowing Downsizers to move to lifestyle towns that may be inland and offer more housing affordability.
Similarly, we're seeing downsizers relocate within the capital city where they live, but to new accommodation which allows them to stay in close contact with their children, grandchildren, and friends.
Since the pandemic, we've seen Australians more generally open to moving further from capital cities, knowing that through technology they can maintain employment and connection. This has also opened up the opportunities for downsizers to move further afield from what they otherwise would have considered.
About Mark McCrindle
Mark McCrindle is a social researcher with an international following. He is recognised as a thought leader in tracking emerging issues and researching social trends. Having developed his reputation across two decades as an award-winning social researcher, best-selling author and social commentator, Mark has appeared across all major television networks, radio and print media, and been twice invited to speak at TEDx. He has presented thousands of keynotes and workshops in all major industries including finance, technology, health, mining, energy and education for top global brands and organisations. His advisory, communications, and research company, McCrindle, count among its clients more than 100 of the largest companies and leading international brands.
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