Downsizing has become a buzzword in recent years, with the renewed focus on home owning and the housing market. There are huge advantages to downsizing your house.

We take you through downsizing housing options, as well as discussing the advantages and what to consider when downsizing your home.

What is downsizing?

In a property context, downsizing means selling your family home and moving into a smaller, or less expensive, home.

Downsizing can be split into two categories; physical downsizing, or financial downsizing. Physical downsizing is largely self-explanatory - it means moving into a smaller property.

Financial downsizing is slightly different. It doesn’t have to equate with moving into a smaller home. Often, it can mean moving regionally, or to a less expensive area - sometimes to be closer to family. The house itself might not be any smaller, but the move will release equity.

Why do people downsize?

There are lots of reasons why people decide to downsize their home. Usually, it’s a combination, including wanting to release some capital (possibly to fund a retirement or help a child with their own home purchase) or deciding to reflect changing life circumstances, like aging or a break-up.

The advantages of downsizing your home

Exchanging their original home for a smaller home can buy downsizers freedom. Whether it’s reducing the responsibility of home maintenance, or a large mortgage, or freeing up money to either spend or invest, downsizing your house opens you up to the possibility.

Financial benefits

Owning a smaller home will mean lower mortgage payments (or no mortgage if you are able to pay off your mortgage and buy a property outright with the proceeds from downsizing). It will also mean that your utility bills, like heating or cooling, will go down. It’s a great way to save money.

Selling a larger home could free up the funds to enjoy a more luxurious retirement or pay off debts and travel, as well as potentially helping adult children to get on the property ladder themselves.

Less maintenance

Downsizing from a larger home to a smaller one is also likely to mean less maintenance. Often, downsizers choose a lock-up-and-leave property with less outside space or maintenance required.

Better lifestyle compatibility

Less maintenance around a property is also linked to better lifestyle compatibility. Downsizing your family home to move to a smaller place when your family has moved out, or selecting a bungalow to reduce access to stairs as you get older, are both advantages of downsizing.

Superannuation and tax implications

Downsizing can have a huge impact on your superannuation. If you are older than 55, and meet specific eligibility requirements, you are allowed to contribute up to $300,000 of the proceeds of the sale of your family home ($600,000 per couple) into your super.

This downsizing contribution is extremely tax-efficient and could make a difference to when and how you retire.

Considerations when downsizing your home

While there are a number of advantages to downsizing your home, there are some considerations to bear in mind too.

Permanence

It’s important not to underestimate the permanence of what you are doing. Selling your home is a long term move. Once you “downsize” from a larger, more valuable home to a smaller one, it can be hard to go back the other way.

Moving to a smaller home can mean you have to say goodbye to a lot of your personal things. Furniture, clothes, books and other personal items might have to be culled in order to make space in a new home.

Upheaval

Moving house often ranks as one of the most stressful life events, and downsizing is no exception.

Emotional

There will be emotional upheaval when you leave a cherished family home. It can be hard to say goodbye to rooms or spaces that have housed significant events, or mean something special.

Physical

There’s also a lot of physical upheaval in moving homes, particularly from a larger space to a smaller space. Make sure you enlist the help that you need and are patient with yourself, leaving enough time to move in the least stressful way possible.

How to downsize

Even with the upheaval involved in moving, there are definite benefits to downsizing. It can be incredibly cleansing and freeing to dispose of things that have weighed you down for years. It can also be a fresh start.

Do your research

When it comes to downsizing options, do your research. Work out exactly what it is that you are downsizing for - a better location, moving closer to family, a home that needs less work, or increased equity are the top reasons - and make sure that your new property fulfils the criteria of what you are looking for.

The advantage of building a new property rather than buying one is that you can make sure your downsizer has everything that you have ever wanted.

Start early

Downsizing takes time, especially the decluttering process. Begin well in advance of your target move date and really think about your new home and what you do and don’t need for it.

Consider needs vs. wants

You need to rank the things that you are looking for in terms of how important they are to you. Things like the number of bedrooms you need or where you would like to live should be listed as need-to-haves, whereas things like views or aesthetics can be considered nice-to-haves.

Ideally, your new property incorporates both your needs and your wants. Again, this is an advantage of building a property, rather than buying, so that’s another thing to consider when you start to think about downsizing.

Plan storage

Know the dimensions of your new space and your existing furniture to ensure everything fits comfortably. Be aware of how much storage you think you will need. The more storage that you have, the more memories you can bring with you.

That doesn’t mean that you shouldn’t be incredibly discerning when decluttering.

Choose the right property

Choosing the right property when downsizing involves careful consideration of your needs and wants, financial realities, and desired lifestyle before you make a final decision.

Is it easier to buy or build a home in Australia?

Whether it’s cheaper to buy or build a home in Australia varies on a case by case basis. The costs of both buying and selling depend on the location.

Selling your house will be affected by the market conditions, as well as interest rates, and buyer demand, while the cost of your build will likely be determined by your tastes. The more high-end your fixtures and fittings the more your build will cost.

Novus Homes can work with your budget to make sure that you design the home of your dreams that suits both your now, and your future.

Downsizing with Novus Homes

Novus Homes has a number of beautiful downsizer homes. All of our designs are customisable, so we can help you create a bespoke home that is tailor-made for your tastes.

We’ve been in the business for over thirty years so we are perfectly placed to talk you through the process of downsizing and whether it makes sense to build or buy.

Our team of experienced professionals can help guide you through the entire home design process, from design and construction to finishes and fixtures. Contact us now to find out more.