Deciding whether to downsize your home? Find out more about what’s involved in making the choice.
When there’s strong performance in the property market, it may seem like a good time to downsize your home. It’s wise to take into account your lifestyle preferences, personal and financial circumstances and get some advice before you start planning a move.
How do I want to spend my time?
If you’re planning to downsize your home, it’s worth taking a good look at the benefits your lifestyle before requesting property appraisals and selling your current home.
The 2011-12 ABS Survey of Income and Housing reported that home owners aged 55 and over are more than twice as likely to have three or more spare bedrooms in their home than those aged under 55. That’s a lot of extra bedrooms and bathrooms to keep clean. Throw in garden maintenance and you’ll be spending retirement years pruning and scrubbing instead of relaxing.
Moving to an apartment can be particularly attractive if you like to travel. Maintenance for common areas, facilities and even security may be provided under your strata agreement, offering you convenient lock up and leave arrangements when you’re travelling for an extended period.
If you like having all your belongings with you and enjoy a strong community network where you’re living, downsizing could involve giving up things that bring meaning to your life. Leaving an area where you have support from friends and family could also mean giving up your independence when you’re older and need help with day-to-day living.
What about my finances?
According to the ABS 2013-14 Survey of Income and Housing, many seniors have relatively low income and higher personal wealth thanks to home ownership. 82% of older couple households are living in their owner occupied dwelling without a mortgage. Selling that home to fund future lifestyle expenses might seem like a good idea. But when you sell your home and keep some or all of the proceeds for 12 months+, your new found wealth – and any investment income you might be expected to earn from it – could affect your aged pension entitlement.
You also need to add up the costs of selling your home and buying a new one – including taxes, fees for property valuations, conveyancing, agent’s commission. These can also take a big chunk out of your retirement nest egg. Speaking to a financial advisor can help you make a decision that will leave you better off, now and in the future.
Apartment pricing and living – what to look for?
If your lifestyle preferences and finances add up in favour of downsizing your home, make the move to a place with everything you need. Look for apartments with enough space, including a study or spare room for guests, plus a balcony or courtyard with a good aspect for enjoying time outdoors. Check the levies you’ll be paying are within budget and that the building allows pets if you’re planning to move in with yours.
According to a report from the Productivity Commission smaller, affordable homes for seniors looking to downsize their homes are in short supply, driving apartment pricing up for suitable properties. If you have a destination in mind, keep an eye on the local housing market so you can make a competitive offer when the right place comes up.
Have you chosen to downsize your home? Tell us about your experiences in the comments below.