Is downsizing still a viable option?

Downsizing means something different to each and everyone. When I am talking to someone in their 60’s and we discuss their future plans – they mention it might include selling the large family home and “downsizing” as kids may have all moved out, the house is getting a bit tired/old and it’s time to simplify things.

From what I have seen over the years, downsizing prior to the Australian housing market going up by vast amounts since 2020, it used to involve selling the family home for say $1 million dollars (generally 4 bedroom, on a larger block etc), then buying somewhere smaller but newer for $650,000 - $700,000. Now that won’t immediately free up $300,000 (as you have to consider stamp duty etc). However, it did still leave retirees with a few hundred thousand extra to help fund their retirement.

It is still doable to free up capital now-days and it all depends on what you have and what you are wanting, however I am working with a lot of clients now where downsizing actually might mean spending the same $1 million dollars they sold their home for and having to pay extra on top for stamp duty. Usually this might mean – the retirees are still in the same suburb they like, with a nicer newer home and hopefully less maintenance/upkeep in retirement.

Before retiring completely is usually a good time to start planning. Even if downsizing might not occur until many years into retirement, it is good to have a rough plan, as sometimes health / other reasons might mean you need to downsize sooner than expected.