Standing out from the mainstream media gloom surrounding a hawkish central bank and cooling property prices is the downsizer boom.
In fact, downsizing is Australian property’s best-kept secret and it’s particularly interesting for property developers.
Why? Because downsizers are high-intent, asset-rich purchasers who like to buy new-build properties off-the-plan.
Plus, it’s a huge addressable market.
There are 8 million Australians in the 50-plus age bracket and, according to research published in the Downsizer Download Issue 1, there are 1.7 million households planning to downsize in the next 5 years. That means 1.7 million sales … and 1.7 million mortgage-free purchases with plenty of equity left to go on a luxury spending spree or top up the superannuation.
Motivations for downsizing include lifestyle, being closer to grandchildren and releasing capital to boost retirement income or help the family financially.
There is even a federal government incentive to downsize called the superannuation downsizer contribution. From July 1, you can be eligible to make a downsizer contribution of up to $300,000 a person (potentially $600,000 a couple) from age 60 (down from age 65) and in the recent pre-election period there was bipartisan support to lower the age to 55.
“According to our research, more than 90 per cent of households who intend to downsize want to make it happen in the next 6-36 months,” says Mark Macduffie, co-founder and managing director of Downsizer. “For property developers with pre-sales targets and a pipeline of finished supply coming on to market in the next three years, downsizers are the perfect buyers,” he says.
“We know the Baby Boomer market—we have the buyer profiles, property-market intelligence and search data. We’ve also got proprietary demographic and economic research from our in-house economist-in-residence, Michael Blythe,” said Macduffie.
“For example, we know that downsizers like new-build dwellings because of the luxury finishes, lifestyle amenity, security features and, most especially, the low maintenance. The extended settlement time when buying off-the-plan is also very valuable as it gives empty nesters plenty of time to get organised.”
There is one barrier, however, to empty nesters making their downsized property dreams come true, which is the 10 per cent deposit that is payable on exchange of contracts.
This has always been a perennial problem for owner-occupiers—how do you find the cash to pay the deposit before you’ve sold your current home? As Australia’s house prices have skyrocketed, this has become an increasingly big issue.
“Traditional solutions like bridging loans don’t work for older Australians because they are predicated on passing responsible-lending assessments involving payslips,” Macduffie says.
“Downsizer has solved that problem with our cashless deposit bond, which is backed by the untapped equity in the home that you already own,” he says.
“Moreover, we’ve made it really easy to apply for a Downsizer Bond. You just go to our website, type in your current address, answer a couple of easy questions and we’ll tell you instantly if you are eligible and what you can afford to buy. Then you can search our marketplace to find your new home.”
“We are the perfect partner to help property developers tap into this huge market,” says Macduffie. “That’s why we called the business Downsizer.”
Downsizer is an award-winning property-technology company that harnesses digital analytics, big data and insights plus automated-valuation technology to help everyone involved in the downsizing process, including property developers, real estate agents, the downsizers themselves and their financial advisors.
Downsizer is a finalist for “Best New PropTech” in The Urban Developer awards for 2022.
Proptech Association Australia named Downsizer its “Proptech to Watch” at the 2022 Proptech Awards where Downsizer was also a finalist in the Ownership, Affordability and Finance category and Mark Macduffie was a nominee for Proptech Leader of the Year.
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