8 April 2019
Cashed-up downsizers are flexing their muscles in Australia’s current flat property market and even forcing a new approach to apartment design.
Australian Bureau of Statistics figures released on 19 March show that residential property prices across Australia’s eight capital cities fell by 5.1 per cent in the year to December 31, 2018. Sydney dropped by 7.8 per cent and Melbourne by 6.4 per cent. Canberra, Hobart and Adelaide were the only capital cities to record a price rise.
Recent real estate results from across the country have illustrated how downsizers are driving the market, given the reduced activity from local and overseas investors.
In Sydney, it was reported on 16 March that feuding downsizers played a major role forcing a Kirribilli apartment to sell $900,000 over the reserve. In addition, former Prime Minister Bob Hawke sold his Northbridge mansion to downsize into the CBD, while aged care supremo Mark Moran has listed his Point Piper mansion to downsize to North Bondi.
Meanwhile, the owners of the proposed Channel Nine development site at Willoughby are about to place the site back on the market, in a move designed to capitalise on the booming downsizing market.
It’s also been reported that Mosman downsizers are struggling to find downsizing-friendly properties and that downsizers are the most active buyers on Sydney’s northern beaches.
Meanwhile, in Melbourne a townhouse property at Collingwood sold on 23 March after significant interest from downsizers. One Melbourne real estate agent was quoted as saying: “If you are down in one sector, such as with the investors or first-home buyers, then the downsizers might step up.”
In Brisbane, a Toowoomba-based downsizer secured a Brisbane home.
What the experts say
Sydney-based buyer’s agent Amanda Gould (below), from High Spec Properties, told Downsizing.com.au that downsizers were now 10-15 per cent more likely to be her clients, compared to four years ago.
She said downsizers were now more prominent in the market, due to a reduction in the number of investors looking to buy. “There are less people in the market, so therefore you notice more the group that is out there still buying,” she said.
Ms Gould said that downsizers were not always looking to purchase a cheaper property, but often looking for a different property which better suited their stage of life - such as an apartment closer to the city or with minimal maintenance.
Raine and Horne executive chairman Angus Raine (below) said downsizers were finding it easier to operate in the current market, particularly if they set a realistic sale price for their family home and then bided their time to get a good price for their new home.
“For downsizers, there has not been a lot of gain in buying and selling in the previous boom market. It is easier to compete in the current flatter market when buying, as long as you are realistic when you are selling,” he said.
Mr Raine said that the current market activity however had exposed a lack of suitable available stock for aspirational downsizers, particularly in relation to townhouses and larger apartments.
Downsizers forcing changing design
This trend was affirmed by David Chin, founder of investment advisory firm Basis Point. He said downsizers were forcing a change in apartment design, away from small one-bedroom apartments favoured by investors and towards larger apartments favoured by downsizers.
He stated: “There is a tailwind in terms of the demographics, especially the baby boomers who have more capital, as they make that transition to apartments for lifestyle reasons.”
“The larger two- and three-bedroom apartments still have a market. In Europe and (places like) Paris, it is quite common for apartments to be very large, three bedrooms, almost like homes. It sets the higher density living in three- four-, five-storey buildings, not high rises. It works and I think that will be more common in Australia.”
It should also be noted that downsizers aged over 65 also have the advantage of now being able to make contributions of up to $300,000 per person into their superannuation as a result of releasing equity from the sale of the family home.
Downsizing.com.au has a range of apartments which would cater for lifestyle downsizers.
For instance, check out the projects below:
- Clarion Residences at Waterloo in Sydney
- The Healey at Moorabbin in Melbourne
- Apartments by the Velocity Group in Queensland
- Apartment projects by the Crown Group in at Waterloo and Eastlakes in Sydney
By Mark Skelsey, News Editor at Downsizing.com.au, email Mark at firstname.lastname@example.org