Whether it’s due to COVID-19, spiralling home prices, remote working or large life-long mortgages, Australians are increasingly seeking out new downsizing options.
In response, over 50s housing providers are innovating and delivering interesting new downsizing pathways suitable to people from all walks of life.
This means potential downsizers now have a myriad of new options, apart from the well-worn path of moving from a house to a retirement village.
Below are eight emerging techniques which have become more prevalent over the last two years but are still under the radar of many potential downsizers.
Investing in retirement property
The traditional downsizing transaction involves a couple selling their house, moving out and then buying and moving into a retirement property.
However, a new generation of downsizers are recognising the benefits of separating the buying and moving aspects of downsizing.
These downsizers are identifying their desired retirement property, then purchasing this property and renting it out for some time - a bit like the ‘buy now, pay later’ of the over 50s housing world.
This option is best suited to general apartments, given there are no restrictions on tenancy arrangements, but could also be used in land lease communities (check the community operator’s policy and the relevant State regulations before doing this).
This trend has been noticed by developer Golden Age, which has completed the downsizer-friendly Sky Garden project in Melbourne’s east.
“Many of the purchasers (in the Sky Garden project) are in their late 40s to 50s and bought now in preparation for retirement, as they appreciate the project’s location and convenience,” a Golden Age spokesperson told Downsizing.com.au.
”They are planning to lease the property for a few years before moving in.”
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Downsizing and still working
Everyone knows that downsizing is all about closing the laptop for good, or binning the hi-vis vest, and doing nothing but playing golf, going on holidays, reading the paper and walking the dog around the village. Or is it?
In fact, there are plenty of over 50s who are keen to downsize and keep working - either due to financial issues (including still holding a mortgage) or a desire to keep mentally stimulated.
This is in line with the fact that between 1991 and 2021, the percentage of Australian workers aged 55 and over has more than doubled from nine to 19 per cent.
In response, over 50s housing providers are catering for workers, including by providing studies and multi-purpose rooms in the home, community wi-fi and even separate office suites or co-working spaces which can be bought or hired.
For instance, land lease community operator Hometown Australia caters for downsizers who want to continue to work from home, with many home designs including study rooms or areas and some locations have high-speed NBN internet connections directly to the home.
Meanwhile, at Sydney downsizer-friendly apartment building Akoya, residents are able to purchase a collection of premium office suites, if they are keen to continue working just an elevator ride from home.
Victorian land lease community provider Lifestyle Communities also promotes itself to “retired, semi-retired and working downsizers”, with around 20 per cent of the company’s incoming residents still working.
Downsizing loan arrangements
Until now, downsizing has been based on the assumption that a couple have paid off their home mortgage and don’t need to worry about debt issues when moving into a new home.
However, with Australia’s rising rates of mortgage indebtedness, that rosy view of the world is starting to fade into the rear vision mirror.
According to research released by the Australian Housing and Research Institute in 2019, the number of Australians aged 55-64 who have a mortgage is expected to jump from 36 per cent in 2016 to 54 per cent in 2031.
Meanwhile, the number of mortgage-holding over 65s is expected to rise from nine per cent to 14 per cent over the same period.
As a result, more Australian over 50s will need financial products - which have not been traditionally available - allowing them to downsize into age-appropriate housing and at the same time manage this (or new) debt.
In June 2021, Land Lease Home Loans arrived on the scene to provide loan arrangements to help over 50s downsize into land lease communities operated by Ingenia.
It’s likely that more options will become available to downsizers over time.
Rental apartment buildings
New forms of secure rental living are challenging the notion that downsizing is about moving from one form of home ownership, to another form of home ownership.
These projects are servicing the surge in over 50s renters who either fell out of home ownership or have never been able to afford a home, along with the fact that even current home owners realise that renting is a smart move.
In particular, new rental-only apartment buildings - known as ‘build to rent’ projects - are coming on to the market. The most well-known of these are operated by Mirvac, such as its LIV Indigo project at Sydney Olympic Park.
These projects provide:
- No stamp duty or exit costs
- Modern communal facilities, including gyms, libraries and co-working spaces
- Ongoing and secure leases, given the building is for renters only
- Annual limits on rental increases
- The ability to easily move out of the building to explore new areas
Mirvac says over 50s make up around 10 per cent of residents at its Sydney Olympic Park complex. Stockland meanwhile, in a market update on 8 November, indicated it’s also moving into the ‘build to rent’ sector.
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Co-living and sharing
Co-living - where groups of residents share communal facilities - is emerging as an important form of over 50s living.
This is hardly surprising, given that the number of group household members aged 55 or over is projected to increase from 151,000 in 2016 to 304,000 in 2041, an increase of 101 per cent.
This compares to an increase of just 34 per cent in group household members in all age brackets during the same period.
Co-living has traditionally involved a group of seniors flatmates finding each other and then finding a home and living together. Downsizing.com.au offers the free Seniors Flatmates service, which allows older renters to find new flatmates.
However, it is increasingly also involving a company or organisation securing a home and then bringing tenants together. In Queensland, startup company Calyptus has come on the scene and is helping bring over 50s together in group households.
Seniors housing, including retirement villages and downsizer-friendly apartment buildings, is increasingly being constructed in the vertical village format.
In fact, it is likely that within the next two years, around half of new retirement villages across Australia will be vertical - forever breaking the stereotype of retirement villages being about ‘villas in a garden’.
These villages typically contain high-end apartment finishes and features. They are catering for downsizers who’ve enjoyed the COVID-19 induced explosion in the value of their detached family home and are now able to afford such luxuries (and the great views that come with them)..
This trend is also being driven by high net worth Australians seeking:
- A low-maintenance, high-quality home environment with house-like proportions for entertaining
- A secured luxury apartment residence that can be easily locked-up and cared for when internal travel opens up again next year
- The ability to access spacious and well-appointed communal facilities, with strata fees to maintain these facilities coming in lower than the maintenance and capital upkeep costs of a large prestige home
- Safe single-level living in walking distance to shops and amenities;
- A quality city apartment to complement a new regional retreat purchased during the COVID-19 pandemic.
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Land lease communities
Okay, so this downsizing option is not really new, but it is certainly growing and becoming a mainstream option in the COVID-19 era.
Land lease communities are also legally known as manufactured home estates or residential parks, or marketed as lifestyle or over 55 communities.
In a land lease community, people buy a dwelling outright then lease the site on which the dwelling sits from the community operator.
Because no land is being purchased, and therefore no stamp duty is payable, land lease living can be more affordable and therefore has become more attractive during the era of COVID-19 induced property price rises.
Furthermore, the fact many communities are located in regional areas has also made land lease living more popular during the COVID-19 induced ‘push for the bush’.
Given the above, it’s hardly surprising that ASX-listed property companies Ingenia and Stockland recently announced they are going to tip some $1.1 billion in capital into growing their land lease community development pipeline.
FIND OUT MORE: Land lease communities booming in COVID-19 era
Luxury care villages
A new breed of luxury care villages are coming on the scene for downsizers with an eye on their future health needs, and who want to still new enjoy the good life.
These villages are technically not residential aged care facilities but instead retirement villages where residents own their apartment and then receive home care services. Residents can choose in-house care services, or select an external provider.
A wide range of in-house care services are on offer, including dementia and palliative care. Some residents also enter the projects without care needs, knowing that over time they are likely to need these services.
The operators of these villages claim they are the future of aged care, as they will cater for the growing number of Baby Boomers who will be needing support but want to do it in an environment more like a stylish home or luxury hotel than a hospital.
For further information about downsizing, go to Downsizing in Australia: important tips to help your move