The report: ‘Seniors downsizing on their own terms: Overcoming planning, legal and policy impediments to the creation of alternative retirement communities’ – finds that while some older Australians need to downsize, they are discouraged by the lack of appropriate housing stock and the high costs involved.
“Stamp duty, capital gains tax and pension impacts are key deterrents to downsizing,” National Seniors chief executive Michael O’Neill said.
“The report finds that although many retirees are content with staying in their existing homes, a significant number want to move to something smaller but are worried about the financial implications and also the lack of affordable and appropriate alternatives in the current housing stock.”
News reports indicate that Federal Treasurer, Scott Morrison, is considering just this form of action, reportedly canvassing a one-off exemption from stamp duty on the purchase of a smaller house.
According to The Australian, profits from the sale of the family home would be excluded from the Age Pension assets test provided they were channelled into an approved retirement product such as life annuities and aged-care bonds.
The Federal Opposition has dismissed the suggestion as a “thought bubble”.
“What (Treasurer Morrison) should do is recognise that his own government abolished the previous Government’s well thought out measurers to encourage and assist older Australians who wanted to downsize their homes,” said Shadow Treasurer, Chris Bowen.
To buy ‘Off the plan’ or not?
According to real estate author and buyer’s agent Patrick Bright, a number of downsizers choose to buy properties off the plan – but he warns this might be a mistake. He said not only are buyers here vulnerable to potential building defects but they are often limited in the choices of styles and finishes.
“Generally I find baby boomers more discerning buyers,” said Bright.
“Typically they’re downsizing from a family home and are looking for apartments with a lot of space and high quality finishes. This level of quality isn’t easy to find in brand new property however I have had a lot of success in helping downsizers buy established property and then helping them renovate it to taste.
“The problem with most new apartment developments these days is that unless we are talking at the very high end of the market they are generally built as investment products for the developer to sell quickly with a high margin.
“In comparison apartments built in the 60s to 90s are generally in better locations and have more focus on space and outlook.”