Life After Selling the Family Home
Late last year we delved into the question of downsizing, in an article Downsizing Your Property – The Pros, The Cons, And The Various Considerations. In this article, we outlined some typical considerations in deciding whether the time is right to make this somewhat life-changing decision.
Of course, deciding to sell the family abode in favour of a simpler dwelling with less maintenance is only the first of a handful of decisions involved in moving into an exciting new phase of your life.
While the thrill of seeing that ‘SOLD’ sticker may not yet have worn off, you’re now faced with the next pivotal and undeniably, more thrilling decision in the process. Equipped with your now accessible capital, the question is where and what will you buy to call your new home.
It’s important to address the next decision in the process with regard to a property’s features and its location, and what these will mean for your ‘Active Retired’ lifestyle, as termed by Frank Knight property research.
Features to look for when Rightsizing
A significant proportion of our work here at Dixon Family is spent assisting this market of buyers to identify their needs and purchase their new home, a pursuit we find extremely rewarding to be a part of. We want to address some of the questions we think are important to consider before beginning your search.
While ‘downsizing’ is a bit of a trending term, ‘rightsizing’ is possibly a more accurate descriptor of what we see with our clients in this demographic. Yes, a desire for lower maintenance living is there, but what buyers need to be aware of is that it doesn’t have to be at the expense of having the space they desire.
A recent report compiled by Frank Knight reflects this, profiling the top features prioritised by ‘rightsizers’ in the 55+ market. With 3+ bedrooms and outdoor living space considered essential, the data also reports that the top concern of ‘Active retired’ buyers is to retain house-like proportions.
Buyers also place a great deal of importance on ‘High security & concierge for lock up and leave’ as well as ‘single level with lift access’. Both are features we see in high demand amongst this demographic, and to which developers are responding.
When inspecting your options, whether already constructed or off the plan, it’s important to be clear on what features are non-negotiable to you and your planned lifestyle. For years, apartment living has entailed a compromise on space, but this is changing. As medium density living is on the rise in Australia, developers are noting this market’s demand that “their new home request is to be the right size with features to match”.
The right location for your Rightsized life
Choosing the location of your new home is something you want to do carefully, and with regard to various factors in your life. Importantly, we prompt our clients in this market to reflect on whether they want to remain in the same area (close to family and friends) to the property they’ve just sold, or experience somewhere with different characteristics on offer.
With data showing a significant difference in median values between houses and apartments within prime suburbs, for a certain sub-market, staying within a familiar suburb is an appealing option. What this often comes down to is the availability of luxury apartments (with the aforementioned features) within the suburb just sold in.
Going down this path can leave available a sizable capital balance after the purchase of a new home. Depending on personal circumstances, this can be appealing to ‘Active Retirees’ seeking to provide financial support to adult offspring, or to supplement their own retirement income.
However, with reduced work commitments and increased leisure time, access to lifestyle precincts, public transport, and airports are all priorities we often see in buyers at this stage of their lives.
For those choosing to migrate to a different suburb within Brisbane, we frequently see a move towards the CBD’s fringe (which in Brisbane often coincides with being along the Brisbane River), but on the same side of town as they’ve previously resided. We often see clients moving from Chelmer, Pullenvale, and Brookfield to Toowong, West End, and St Lucia.
Whether the familiarity and friendships of your current neighbourhood hold you there, or the seachange of somewhere more urban beckons, we advise buyers at this stage to really reflect on the lifestyle sought in their ‘Rightsizing’ pursuits.
The tax incentives that have aided the Rightsizing movement
A few years ago, we would commonly encounter empty-nester clients who were convinced they wanted to downsize, except for one, very significant barrier: the resulting figure they stood to lose on their premium family home through stamp duty, commissions, legal fees and moving costs.
On the bright side we’re pleased the Australian federal Government recognised and responded to this hurdle for many retired Australians. In July 2018, a concession was introduced for those aged 65+, allowing up to $300,000 from the sale of a family home owned 10+ years, to be contributed to one’s superannuation fund. Furthermore in couples, this contribution can be made by each 65+ aged owner of the property, with those contributions each capped at $300,000. This potential $600,000 tax free injection into your super account is very attractive.
This has really freed up a lot of people seeking that shift in lifestyle to match their stage in life, the results of which have been especially visible to those in the real estate profession. We’ve seen a significant increase in clients joining the ‘Rightsizing’ movement in recent years, a key factor in the way developers are now catering to this market and their search for highly livable, medium density dwellings in reach of urban conveniences.
Big changes in life can be overwhelming at times, but those are often the ones that come with the greatest reward. At the end of the day, it’s a deeply personal decision to move forward into a different phase of life. Fortunately in Australia, ‘Active Retirees’ are a market whose needs are high on the list of developers’ designs, so compromise is no longer a necessity when choosing to abdicate the premium family home.
References:
Ciesielski, M. (2020) Rightsizing: Australian Prime Insight. Knight Frank Research. Retrieved from https://content.knightfrank.com/research/1904/documents/en/rightsizing-2020-6930.pdf
Knight Frank Research. (2019) The top 12 features considered by the ‘Active Retired’ group when buying prime residential property in Australia. Retrieved from https://content.knightfrank.com/research/1904/documents/en/rightsizing-2020-6930.pdf
Knight Frank Research. (2019) Typical local migration patterns of the ‘Active Retired’ group in the prime suburb regions. Retrieved from https://content.knightfrank.com/research/1904/documents/en/rightsizing-2020-6930.pdf
