It’s only natural to feel uncertainty when making the decision to downsize your home to something smaller. Many of us develop an emotional connection with the family home, carrying lifelong memories and building a community/network of friends over the decades. While it’s preferred to find a smaller home within the same local area, this creates two barriers – difficulty purchasing a desirable dwelling at a reasonable price and the potentially limited availability of suitable homes to downsize to in the area.
Australia is experiencing a significant shift both economically and socially, with an increasing share of baby boomers (born between 1946 and 1964) reaching retirement. With this rise also comes the demand for suitable housing for people reaching this milestone.
As with all movements, there are some pros and cons to consider For downsizing; this may include:
In the wake of the pandemic, the State and Territory Governments have offered further discount schemes to support seniors, allowing you to save thousands from your stamp duty when downsizing. All state and territories have increased their incentives to downsizers and retirees, although Victoria arguably leads the pack in terms of the most generous offering. Eligible pensioners can avoid paying any stamp duty if they purchase for under $330,000 and. A concessional discount is offered on purchases between $330,001 to $750,000.
In the Melbourne market, where the median house price sits above one million dollars, $330,000 may not get you much. However, for the greenfield market, stamp duty applies to the land component, which currently sits at a median price of $328,000. If you’re looking to purchase a land lot at this price or below, no stamp duty is paid; equating to savings of $12,870 (according to the State Revenue Office of Victoria).
Eligibility is based on the following:
With the established market recording more than 17% growth over the past twelve months, potential downsizers can see significant growth in their existing home. It is worth noting; however, this also poses the problem of buying into the same market, which has been heavily impacted by supply.
COVID-19 has impacted all facets of our lives. The inability of families to visit each other over the past 18 months will likely have marked and permanent shift in the minds of some downsizers. The pull to remain in the local area will be countered by a pull of being closer to family.
RPM Research indicates no major change at present by downsizers; however, we expect this to change over the coming years.
Aside from being within the same growth areas as family, the Greenfield Market offers a much more financially friendly alternative to remaining in inner or middle ring suburbs.
Selling your existing dwelling in a tightly held inner or middle ring and making a less expensive purchase in the outer ring or even in a regional area, allows for a massively increased level of cash reserves.
Additionally, by buying new, you can design a home that suits your needs exclusively; the same goes for townhomes that now offer various floorplans and configurations.
Before any decisions are made, potential downsizers should be in discussion with their family but, more importantly, gain independent advice. This can come in the form of;
Wanting to downsize in the greenfield market? Contact our team today.