Experts reveal how downsizing could be the unexpected solution to the housing crisis
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As the population continues to grow and the number of available housing properties unable to keep up, many realise how hard it can be to find rental properties and land titles within their desired budget.
But it can be particularly difficult for those who are retired and living on a tight budget.
The housing issue is more complex than many know, and, according to one particular economist, the idea of seniors downsizing their lifelong homes could turn out to be the answer to housing issues.
'It's quite a complicated process and we do need to make it simpler,' Downsizing Economist Michael Blythe said.
'We talk about a housing shortage in Australia, but what economists will tell you is we've got an excess of bedrooms, just not in the right place...maybe instead of first home buyers, we should be thinking about last home buyers.'
Blythe stated that by urging retirees to downsize from the multi-bedroom houses they have settled in for decades—to smaller and more cost-efficient homes—larger homes that are more suitable for families could be freed up.
But not everyone wants to consider this option, and those who do, often find taking such a huge step this late in life is daunting.
Data showed that one-third of the baby boomer generation feels that their house might be too big for them.
Couple Ros and Ken Vaughn, aged 73 and 80, respectively, explained how the maintenance of their Carrs Park home—where they had lived for 38 years— was becoming too much for them, and they decided it was time to make a change.
'It wasn't an easy decision initially, but then I saw Ken up on the roof—the maintenance on this house was beginning to show,' Ros Vaughan said.
'We knew we had to find the right place for us, while we were fit enough to do it.'
The couple decided to move into Oasis Apartments in Peakhurst.
But while Ros and Ken may see downsizing as an ideal way to make their life simpler, the process of moving as well as freeing up the equity may not be as easy.
'They're asset-rich but cash-poor, and we need to find some way to rationalise that,' Mr Blythe said.
'We need to find a way to generate income for this group and get them into dwellings.'
There are options available on how to make the transition into a smaller house a breeze.
Those over 55 years of age are able to take advantage of the Downsizer Contribution Scheme, which means they can directly place $300,000 from the sale of their home into their super account.
'One of the hidden secrets of downsizing given the returns super funds generate, the average downsizer is looking at an extra $20,000.'
'It's essentially a deposit bond, so it's not like a reverse mortgage, it's not like bridging loans—all of which are quite expensive,' Mr Blythe added.
That said, the growth of online property platforms has made checking properties available more simple.
'There's mostly independent living (properties), there's retirement villages, there are land lease communities,' CEO of Downsizing.com.au, Amanda Graham said.
'Obviously people are very emotionally attached to their home, (but) it can free people up to have the sort of lifestyle that they want.'
Members, what are your thoughts on downsizing? Would you consider doing this? Share your thoughts with us in the comments below!
But it can be particularly difficult for those who are retired and living on a tight budget.
The housing issue is more complex than many know, and, according to one particular economist, the idea of seniors downsizing their lifelong homes could turn out to be the answer to housing issues.
'It's quite a complicated process and we do need to make it simpler,' Downsizing Economist Michael Blythe said.
'We talk about a housing shortage in Australia, but what economists will tell you is we've got an excess of bedrooms, just not in the right place...maybe instead of first home buyers, we should be thinking about last home buyers.'
Downsizing may be one of the solutions to the housing crisis. Image source: pch.vector on Freepik.
Blythe stated that by urging retirees to downsize from the multi-bedroom houses they have settled in for decades—to smaller and more cost-efficient homes—larger homes that are more suitable for families could be freed up.
But not everyone wants to consider this option, and those who do, often find taking such a huge step this late in life is daunting.
Data showed that one-third of the baby boomer generation feels that their house might be too big for them.
Couple Ros and Ken Vaughn, aged 73 and 80, respectively, explained how the maintenance of their Carrs Park home—where they had lived for 38 years— was becoming too much for them, and they decided it was time to make a change.
'It wasn't an easy decision initially, but then I saw Ken up on the roof—the maintenance on this house was beginning to show,' Ros Vaughan said.
'We knew we had to find the right place for us, while we were fit enough to do it.'
The couple decided to move into Oasis Apartments in Peakhurst.
But while Ros and Ken may see downsizing as an ideal way to make their life simpler, the process of moving as well as freeing up the equity may not be as easy.
'They're asset-rich but cash-poor, and we need to find some way to rationalise that,' Mr Blythe said.
'We need to find a way to generate income for this group and get them into dwellings.'
There are options available on how to make the transition into a smaller house a breeze.
Those over 55 years of age are able to take advantage of the Downsizer Contribution Scheme, which means they can directly place $300,000 from the sale of their home into their super account.
'One of the hidden secrets of downsizing given the returns super funds generate, the average downsizer is looking at an extra $20,000.'
'It's essentially a deposit bond, so it's not like a reverse mortgage, it's not like bridging loans—all of which are quite expensive,' Mr Blythe added.
That said, the growth of online property platforms has made checking properties available more simple.
'There's mostly independent living (properties), there's retirement villages, there are land lease communities,' CEO of Downsizing.com.au, Amanda Graham said.
'Obviously people are very emotionally attached to their home, (but) it can free people up to have the sort of lifestyle that they want.'
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good on you
