Downsizing: here’s what you need to know
You don’t need to be a retiree to be in the market for a downsizer property. After all, it’s quality over quantity, right? It’s 2022, and many homeowners have had an awakening over the last two years: preponderant properties don’t necessarily mean happier homes.
“Less is more”, they’re saying, and considering society has embraced the sustainable living trend while moving towards a more eco-friendly way of life, why wouldn’t downsizing make sense?
A quick glance at the market
If you’re looking to sell your home to move into an apartment, chances are you’ll be in a good position to do so. Throughout 2021, Sydney median house prices grew 29.1% while apartment prices rose by just 15.3%. Basically, if you sell your house in this climate, you’ll be making more money while saving moolah on your apartment purchase.
But there’s more good news for downsizers. Because the gap between house and apartment median prices reached an all-time high in 2021, some of you may find yourself with a big cash windfall following your move to a smaller home. Yes, please!
A better lifestyle
Once upon a time, Australians showed off their enormous, spacious homes with pride. But new research from the ABS for CommSec indicates that while Australian homes are known as being the largest on earth (now as big their American counterparts), many homebuyers are now looking to go against the grain by downsizing in 2022.
“If you’ve got the money, why not go bigger?” is a sentiment I hear often. But with larger properties comes higher utility bills. Larger floor space and more rooms equals a need for stronger air conditioning, extra maintenance and much, much more cleaning. Downsize to a smaller property and you’re likely to save a buckload of cash over the years, while also earning back time for the more important things in life.
I’ve found that homebuyers who downsize find their streamlined and minimalist lifestyle leaves a far smaller carbon footprint, and have more time to work on hobbies, and hang out with family and friends, because there is less time wasted on things like household chores.
Why do people downsize?
Research conducted in 2020 by the Australian Housing and Urban Research Institute (AHURI) shows that 18% of people downsizing their homes wanted to unburden themselves from the responsibility of a large home and garden to maintain.
On the other hand, 27% of those downsizing did so in search of a better lifestyle, while a further 27% downsized for financial reasons. But how can downsizing offer a change of lifestyle exactly?
It all depends on where you’re planning to relocate to.
Did you know that according to Domain, a whopping 70% of downsizers chose to move closer to city areas? So if you’re downsizing in Sydney’s east for example, you’ll be tapping into an area and lifestyle that is pulsating with cafes, bars and restaurants. The proximity to the city is also incredibly close, as are numerous beaches and green spaces.
Keep this in mind
There are three significant questions you need to ask yourself before you commit to downsizing:
Should I buy or sell first?
This comes down to your individual circumstances and the state of the property market at the time.
While selling first will release the capital tied up in your existing home, giving you total certainty on what you can spend, many sellers opt to buy their downsize home first before the property prices increase any further, as we have seen in the rising market of 2021.
What will I downsize to?
Before you go all-in with your decision to downsize, create a list of what you want and what you need from your new home.
Are you after a home with a small backyard? If so, an apartment won’t meet your criteria.
Do you want a balcony or somewhere to sit while you sip your morning coffee and watch the world go by? If yes, a townhouse in a crowded complex might not be the best fit.
You’ll also want to consider which suburb you move to, as some may be excessively built up and a shock to the system if you’re looking for a quiet little hideaway, while others may be too far from the nightlife if that’s what your heart desires.
It’s really important to understand exactly what you’re looking for in a downsize property, and equally important to know what you’re willing to compromise on.
Have I done enough research?
The better informed you are on all your options, the better outcome you will have when it comes to buying your new downsize property and selling your existing home.
Research allows you to discover what your current home is worth, and what your ideal downsize property is currently selling for. Once you’ve sorted this out, you have a good foundation for future decisions, such as “do I buy or sell first?”.
Researching as a homebuyer or seller is all about understanding the property market and how it can fluctuate. Remember, the more informed you are as both a buyer and seller, the more decisive you will be when it comes to making that life-changing decision.