Downsizers and young buyers are often competing for similar homesCredit:Steven Siewert
The Demographics Group co-founder Simon Kuestenmacher said the trend of cashed-up downsizers was relatively new,thanks to runaway house prices in the new millennium.
“Traditionally speaking,downsizers would have been cash-strapped retirees. Now they’re people who bought on the cheap and have generated a lot of wealth,” he said. “Twenty years ago,people that were downsizing didn’t have that much money because their homes didn’t accrue that much wealth.”
High property prices were also working against downsizers,though,Kuestenmacher said,as it meant they faced a higher stamp duty bill. Greater capital gains on larger homes could also delay them from making a move.
“Downsizing doesn’t sound all that attractive once property prices keep rising and rising,” he said. “A property that went up $60,000,$80,000,$90,000 a year,why would you downsize?[They might think:] ‘If I wait another year,I get another $100,000’.”
Downsizer Bronwyn Roberts decided to leave behind her six-bedroom Turramurra house on a 1000-square-metre block after two of her children finished school. But she was not ready to move into a unit – a common struggle for those in her cohort.
Bronwyn Roberts with her daughter Grace and Grace’s boyfriend,Mitch at her North Turramurra home before she downsizes.Credit:Edwina Pickles
“It’s not actually easy finding something because I don’t necessarily want to live in an over-55s. I didn’t feel like it was the right stage of my life,and then I looked for apartments,and I didn’t feel like that suited me either,” said the 55-year-old owner of Face Studio by Bronnie.
After six months of searching,she landed on a smaller St Ives house on 400 square metres. The sale of her larger home gave her a healthy budget in a competitive market where there were few properties to choose from.
Her selling agent Ray White Upper North Shore’s Matt Bolin said there was a dearth of suitable homes for downsizers.
“What they ideally want is half the size of the house and half the size of the block. However,we don’t have anything like that in our area. The new planning laws will allow for that,” Bolin said.
He said cashed-up downsizers were edging out younger buyers who competed for similar homes but also,in turn,helped their own adult children with the leftover money.
SEA-Smythe’s James Smythe had observed a similar trend in the northern beaches,where cash downsizers were fuelling demand and,subsequently,prices at the higher end of the apartment market.
“They’re telling me that they’re quite happy to pay $2.5 million up to $4 million[for] a premium downsize,” Smythe said,adding that most were cash buyers as they had built up significant equity in their decades of homeownership.
He had seen several instances where downsizers bought a home for themselves,an investment property,or two units for their children and still had money leftover after selling their family home.