What Developers Need to Know About Downsizing Boom

Australia is on the cusp of a home downsizing boom.  

As reported in the Downsizer Download, Issue 1, there are 1.7 million Australian households planning to downsize in the next five years. 

Moreover, according to that data, the majority of those downsizers want to make this move in the next 6-36 months.

For property developers selling off-the-plan, downsizers are an ideal buyer.

There are many motivations for downsizing, including lifestyle, moving closer to family, and releasing capital.

Downsizers are high-intent and asset-rich, typically buying mortgage-free at settlement.  In fact, being mortgage-free—and enjoying financial freedom in retirement—is a clear driver of the growing downsizing trend.  

The average downsizer releases $309,000 of net equity that can be used to top up superannuation, help the family financially or go on a luxury spending spree.

▲ Apartments in Geocon’s WOVA development in Canberra are available for exchange of contracts with a Downsizer Bond.

The ability of downsizers to complete at settlement is therefore not dependent on final mortgage approvals and is shielded from the rising interest rate cycle.  

“This cohort is exceptionally low risk for developers. Downsizers don’t walk away from a purchase contract,” Downsizer managing director Mark Macduffie said.  

New-build dwellings are attractive to downsizers, who are motivated by location, security and lifestyle. 

“We know that downsizers value comfort and convenience, which is why modern luxury apartments are so appealing.

“We also know the extended settlement period when buying off-the-plan is really valuable to downsizers because there is plenty of time to get organised,” Macduffie said.

The one issue that remained, however, was how to fund the deposit to secure the exchange of contracts.  

“Property developers hear it all the time; potential buyers love the property but they can’t afford the deposit,” Macduffie said. 

“For many downsizers, funding the deposit is the only barrier that is stopping them from living the dream in their golden decades. Sadly, the usual options of bridging finance—or selling first then renting while house hunting—just don’t work for older Australians.

“That’s why we developed the cashless Downsizer Bond.”

The Downsizer Bond is backed by the untapped equity in the buyer’s currently owned home.  

For interested downsizers to be approved in principle, there is an eligibility check via the Downsizer.com website. There is also an online marketplace showing properties from partner developers.

“We’re interested to work with more developers across the whole of Australia,” Macduffie said.  “Our mission is to help a whole generation stop worrying and start living.” 

Downsizer is a finalist for Best New PropTech in The Urban Developer awards for 2022.

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