Biggest hurdle facing Qld’s downsizing Boomers

There is a big barrier to selling the family home despite a Labor proposal aimed at getting empty nesters to downsize.

A proposed new law to encourage empty nesters to downsize and free up larger homes for families has been welcomed, but a lack of suitable housing stock is one of the biggest barriers facing older Queenslanders.

Federal Labor introduced legislation yesterday that, if passed, would give older Australians a two-year exemption from the assets test for downsizing, allowing them more time to sort out their finances and move properties before their pensions are reduced.

From July 1, downsizers aged 60 and over are also eligible to contribute up to $300,000 from the sale of their home to their super, a policy brought in by the former Coalition government.

More than 8000 pensioners downsized last year, but it is hoped that more empty nesters will be encouraged to do so if the proposed new law is passed.

Place Ascot agent Tony Duncombe said one of the biggest barriers for downsizers was being able to buy back into the suburb they love.

“The availability of suitable stock where they live is often just not there anymore,” he said.

“They don’t want to leave their friends, a favourite coffee shop, their doctor.

“When people do downsize, it is usually to their last home, so if developers are clever, they should be ensuring that new developments have features that suit changing mobility and needs.”

Propertyology’s head of research Simon Pressley said any incentive that encouraged empty nesters to move on and free up bigger houses was welcomed.

But he added that those same downsizers also had to try and buy in a market with limited stock, adding there was a “huge gap” in Queensland in terms of what was available to buy.

“People in their 30s, 40s, they need that four bedroom house but they may not want to live 50km from the CBD where they work,” he said.

“Moving is a pain, it is expensive, so removing some of those barriers at a time when most of those downsizers are retiring and watching every cent, that’s how you encourage more people to downsize.”

Judith and Warwick Argent are selling their Bridgeman Downs home and moving to a smaller South Brisbane apartment. Picture: Steve Pohlner

Empty-nesters Warwick and Judy Argent are selling their family home at Bridgeman Downs and have purchased an off-the-plan apartment at South Brisbane.

Semi-retired Warwick, a former Energy Queensland manager who now does odd jobs with a chippy relative, said their Bridgeman Downs property was getting harder to maintain as they got older, with the couple now focused on the next chapter of their lives – total retirement.

They said one of the biggest hurdles for downsizers was the lack of suitable dwellings.

“There is not a lot out there right now,” Warwick said. “We knew we wanted certain things … pretty much everything is off-the-plan now.”

Judy said that any incentives that removed the financial burdens of downsizing was key to making the transition easier for empty nesters.

“You work hard to get your family home and then when you do sell, it is usually at a time when you are also retiring so you are already watching every penny,” Judy said.

“You don’t want to be penalised, and for some people, you can’t afford to move either, so it is nice to see some benefits flowing to our age group.”

Ray White chief economist Nerida Conisbee said the lack of suitable housing for downsizers and ageing Australians was big issue.

“Often they want to stay in the suburb where they are selling but a lot of those family suburbs just don’t have the right housing,” she said.

“It can be very difficult to get high density approved in some suburbs, and we often think of that as a first home buyers problem but it's a problem for downsizers too.

“They are often price sensitive but attached to their community so they also need the ability move within that community and we know that finding any accommodation in some places is a big issue at the moment.”

Under the new Bill, the assets test exemption would be extended to 24 months for principal home sale proceeds, with an additional 12-month extension available in extenuating circumstances such as a natural disaster.

The changes would see the deeming rate on principal home sale proceeds that pensioners intend to use to purchase a new home lowered from 2.25 per cent per year to 0.25 per cent per year.

The deeming rate is an assumed rate of return on financial assets which is used in determining pension amounts.

The legislation comes two months after ABS data revealed the number of spare bedrooms in Australian houses had increased from 12.7 million in the 2017-18 financial year to 13 million in the 2019-20 financial year.

For Deidre and Ian King, who are selling their three bedroom townhouse at Hamilton, being closer to family is their motivation.

They are hoping to buy a smaller house at Nudgee.

“While for us it is a decision that you make to enhance your lifestyle, and that of your family, there are many other couples out there who will benefit from any incentives that make the transition easier,” Deidre said.

“For some, it will make a real difference.”

REA economic research executive manager Cameron Kusher said the new Bill was a “good step but not a silver bullet”.

“My personal view is that if you want to encourage a lot of people to downsize, you have to be more punitive,” he said.

“If people see that owning that larger, more expensive house will affect their pension as it is part of their asset pool, that might be enough to encourage them to sell and move to something smaller.”