According to data analysed by Digital Finance Analytics (DFA), 1.62 million households are looking to sell down their current property within the next five years, an increase of about one-third from 1.2 million a year ago. 

DFA's rolling survey of more than 50,000 households found 69% of these prospective downsizers are between the ages of 60 and 70; 17.5% are over 70, and 11.6% are 50-60. 

The remaining 1.9% are below 50. 


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner-occupiers. 

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
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6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

DFA's data shows just over 70% of these properties to be sold are houses with either three or four bedrooms, while less than 20% are two or three bedroom units. 

More than half (54.8%) of them are valued below $1 million, but almost half are valued at a million or more. 

Nationally, 71% of those selling are seeking to buy a property below $1 million in value, which is close to the national median value

"Thus, we expect to see a significant number of larger properties coming to market ahead," DFA principal Martin North told Savings.com.au. 

"These statistics are going to have a considerable impact on the state of the market – especially at the upper end of the market."

Where are homeowners downsizing? 

Areas in each of the biggest states - New South Wales, Victoria, Queensland, South Australia, and Western Australia - are among the major downsizing hotspots, with areas around Melbourne, "strongly represented": 

Region

Number looking to sell (1-5 years)

Melbourne - South East

     57,670

Melbourne - West

     52,030

Melbourne - Outer East

     45,310

Perth - North West

     43,230

Newcastle and Lake Macquarie

     42,250

Melbourne - North East

     39,550

Melbourne - North West

     37,340

Gold Coast

     35,120

Sydney - South West

     33,460

Adelaide - North

     32,920

Perth - South West

     32,630

Wide Bay

     31,240

Sydney - Outer West and Blue Mountains

     30,910

Mornington Peninsula

     30,430

Sydney - Inner South West

     28,540

Adelaide - South

     28,450

Sydney - Parramatta

     27,730

Latrobe - Gippsland

     25,880

Source: Digital Finance Analytics (DFA)

See also: Property listings flood the market in 2021

Why are they downsizing? 

The value of these properties being sold is immense, expected to reach $1.6 trillion dollars, which is up from $1 trillion in 2018. 

The total wealth extracted from the market will be around $300 billion, and accessing this wealth is one major reason why. 

“These generations understand the amount of equity they are sitting on in their home,” Mr North told The Australian Financial Review. 

“They feel prices have reached a sweet spot – that prices are peaking.”

See also: House price boom eases - is the market losing steam?

Other reasons for downsizing could be to ensure a more comfortable retirement, move to a regional area, to move to a property requiring less maintenance, and more. 

Another key driver in this surge among would-be downsizers is the recent changes made in the 2021/22 Federal Budget. 

In May's Budget, the government announced it would be changing the rules around contributing downsizing savings into superannuation

Specifically, it is allowing over-60s to deposit up to $300,000 ($600,000 for couples) from the sale of their home into superannuation if they downsize, down from the previous limit of over-65s. 

So from 2022, a larger chunk of that 69% of downsizers aged 60-70 will be able to use this scheme, providing more funds to ensure a comfortable retirement. 

"The measure will allow more older Australians to consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families," the government said in its budget papers. 

Take up of this scheme is low however, with only around 22,000 using it in the three years since it was introduced. 

However, CoreLogic head of research Eliza Owen said the downsizing age reduction "is particularly important in the current climate".

"The measure may free up more established housing by incentivising home sales sooner than at age 65," Ms Owen said.

"Housing demand remains high against a low supply of available properties; total listings volumes remain -23.4% below the five year average level.

"However, the measure will not come into effect until July 2022.

"This means motivated downsizers aged 60 to 64 may wait for the scheme to come into effect before selling, and any impact of increased listings as a result would only impact the housing market then."

Downsizers in Tasmania and the ACT can also earn stamp duty discounts or concessions.

Photo by Jean Carlo Emer on Unsplash





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