Downsizing your home: everything you need to know

Written by James Jennings for Australian Seniors

A family home can be a reminder of fond memories collected over decades. But as nests empty, financial considerations come into play and ages go north, a mix of unused space and arduous upkeep can turn your house into more of a hindrance. 

According to research from the Australian Housing and Urban Research Institute (AHURI), more than half of Australians over the age of 55 are open to downsizing to a smaller living space, despite a few hurdles. AHURI Managing Director Dr Michael Fotheringham says the main barrier prospective downsizers face is that they often look to find a smaller property in the area they know best, despite a lack of suitable options. 

“They typically want to look at their local area so they can maintain connection to their community and to what they know – the GP, the pharmacy, the shops,” says Dr Fotheringham. “People like to stay within the area and find a smaller property within it, but our cities aren’t necessarily well designed to provide that. In many areas you’ve got either high-density living or quite low density with larger properties. It creates a whole lot of additional challenges because you have to move to a different part of the city, or to a different city altogether.”

If I want to downsize, what are my options? 

Rachel Lane, Principal at financial advisory Aged Care Gurus and co-author of Downsizing Made Simple, suggests that prospective downsizers carefully research both locations and a variety of housing options to avoid rushing into making the wrong decision. 

Living close to family

“People might like the idea of being close to family and will consider a granny flat, or they might like the idea of being more on their own,” says Rachel. “It’s identifying what it is that you want to change and what that looks like for you, because it’s different for everyone.

“With a granny flat, it’s important to know that the family dynamic is different,” she says. “While it can be a mutually beneficial situation, you need to have a conversation about the important things. What happens if there’s a divorce and the property becomes part of a property settlement? What happens if their child becomes sick and can’t pay the mortgage?” 

Retirement villages vs land lease communities

In regards to retirement villages and land lease communities, Rachel says it’s important to be aware that they’re substantially different.

“In a land lease community, you buy your home and you rent the land on which it sits, so the million-dollar question is how long is your lease over the land? You’ve got to make sure the lease reflects how long you intend to live there. Legally you’re a homeowner, but you can claim rent assistance on the site fees, which can be quite attractive because that can add up to an extra $211 a fortnight on top of the age pension.”

Land lease communities also tend to be in outer suburbs and regional areas because they need the acreage to build a community of freestanding homes, Rachel says. “They also tend to be bigger than retirement village options, which are more often found in metropolitan areas.”

Another option for downsizers to consider is co-housing – also known as “collaborative housing” – this places several different people under the roof of one dwelling. 

Finding a home that suits your lifestyle

Monique Lee, Sales Manager at Yamba Cove Palm Lake Resort, a lifestyle resort for over 55s, says that many people are moving away from outdated concepts of what retirement living can be. 

“I prefer to refer to the process as ‘right sizing’ instead of ‘downsizing’ – it’s about maintaining the luxury you enjoy while reducing the maintenance and upkeep that can feel overwhelming,” she says. “I know that the journey of right sizing can come with its own set of challenges for people, particularly when it comes to finding a home that truly fits their needs. It’s perfectly normal to feel a bit daunted by this process.” 

Whether it’s an apartment, lifestyle resort or smaller house, Monique says that it’s the easier lifestyle and opportunity to connect with others that attracts downsizers the most. “Many buyers value the sense of community and security the most, and they’re seeking an environment where they can connect with like-minded people during a new chapter of their lives.” 

Financial considerations

Finance guru Noel Whittaker, co-author of Downsizing Made Simple, says that it’s important to know the good points and bad points of each option, especially when it comes to finances. 

“If you stay where you are, you might save $100,000 on moving costs, but then if you stay, you may also have to fit out your home with handrails and ramps, which can be costly,” he says. “You need to factor out those sums, but life’s more than money as well. Staying put keeps you connected to your social circle; moving might connect you up with a new one and give you a renewed sense of purpose. Ultimately, it’s what feels right for you.” 

Although the decision to move from the family home can be a deeply emotional one, Monique thinks that it shouldn’t be a deterrent when making a decision to downsize. 

“It’s normal to feel a mix of nostalgia and anxiety, especially if you’ve lived in one place for many years. I often remind my clients that the butterflies in their stomach are a sign of the anticipation that comes with new beginnings. 

“It’s completely natural to fear the unknown, but this transition can also open the door to beautiful new possibilities. You’re not alone in feeling this way; so many share these emotions, and it’s okay to embrace them as part of your journey.”

Fast facts: family home moves 

The Australian Seniors Series: Inheritance and Retirement Report 2024 finds…

• 51% of over 50s plan to put their savings from downsizing towards inheritance for the family
• 60% are intending to leave their home to family
• 25% have decided not to leave their home to family