• Paul Virdi

The Dilemma of Retirees Downsizing

When you have lived in your home for a fairly long period, you get attached to it so much that you find it difficult to move to another property.

With advancing age, maintenance of big old homes is not practical and convenient for everyone.

Now few of the troubles, the downsizers feel when they want to retire are:

  • They have made friends in their neighbourhood which are difficult to replace

  • They remember all the streets and shops nearby so much that they can reach their preferred places in no time

  • They have kids and relatives living nearby whom they depend upon for any urgent need

  • With advancing age, people still want easy commute to amenities in their new home

  • The most important thing is the price they want to pay for the new home

  • They don’t know what kind of property will fit into their needs

  • Finding the right property takes time

With changes in the property market happening due to lending criteria, supply of properties and affordability, it is a tricky situation for the downsizers to be able to sell high and buy low.

The Federal Government has allowed people over the age of 65 to make $300,000 tax free contribution into their super from the sale proceeds of their home.

This measure will apply to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage of this measure for the same home.

The contract of sale date has to be on or after 1st July 2018. This is a big boon for retirees downsizing now. More than 1Million people may be downsizing over a period of 5 years and that might create a bit of competition for the first-time buyers as all the retirees might not be looking for a sea change or country life.

There is a changing trend in the type of properties the retirees are buying. When people still want to live in a suburban lifestyle with easy access to amenities, detached houses on a smaller block might be good fit for them. Loaded with cash from previous sale, they might outbid first timers. But it may not seem that simple as after living for a longer time in their own home , they might

not be able to figure out, where and how big the next house they should buy. So it creates a transition phase of renting in a property for some time until the decision for the next home has been made after some shopping around.

Whatever the decision the retirees make, they are still in a better position as long as they have enough funds to retire, as compared to the people who are yet to start life.

#Retireesdownsizing #babyboomers

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