Wouldn’t it be nice to free up your finances and spend less of it on bills, and more of it on actually living? Downsizing your home can help you do just that.
By definition, the phrase “downsizing” refers to making something smaller. While commonly heard in business terms when applied to a brand looking to reduce their workforce, these days it’s more closely associated with home owners scaling down in regards to the size of their property.
As a homeowner, you might be considering taking this step for a variety of reasons: it could be to boost your finances, reduce your expenses, help you pay for care, or to move into a more suitable home, a better location or you might even just want to take advantage of the current property boom. Your logic is usually linked to both your finances and the stage of your life, but what are some of the most notable benefits of downsizing?
Six Benefits Of Property Downsizing
Most people consider downsizing their home as a means to upgrade their lifestyle. It’s a process that’s usually in the back of the minds of empty nesters, or those edging closer towards retirement – particularly considering the recent legislation changes.
As part of the Federal Government’s package of reforms to reduce pressure on housing affordability in Australia, contributing the proceeds of downsizing into a superannuation account was one of several key measures announced in the 2017-18 Budget.
From 1 July 2018, those aged 65 years old and up can make a downsizer contribution into their superannuation of up to $300,000 per spouse from the proceeds of selling their family home. The real kicker of this policy is that the voluntary contribution is not classed as a non-concessional contribution, meaning that it doesn’t count towards the relevant contribution caps in place. In 2021, the housing market is booming in Australia, but demand is outstripping supply. In turn, Treasurer Josh Frydenberg announced that the Downsizing Initiative will be extended to those 60 years old and up, as a means to boost supply.
However, it’s also important to note that the downsizing hasn’t been a phenomena exclusive to Baby Boomers. The traditional four bedroom home in the suburbs isn’t viable for many Australians, and downsizing has it’s appeals for many. From first home buyers retreating to granny flats in their parents backyards, tiny houses on acreage, and smaller apartments by the beach, downsizing provides a means to both save income and pursue a different kind of lifestyle.
Fewer Possessions – Downsizing is a great way to really assess both how much ‘stuff’ you’ve managed to accumulate over the years, along with how much of that stuff you really use or value. Bigger homes feel empty without this ‘stuff’, but a smaller or more compact home leaves less room for you to fill it with items that you don’t necessarily want or need.
Easier Upkeep – Bigger homes are harder to maintain, and usually come with a never ending list of maintenance and upkeep responsibilities – think cleaning the pool, vacuuming a whole house, weeding the garden and doing the mowing. When you downsize your living arrangements, many people actively seek a new abode that has less ‘chores’.
Pay Less On Bills – Between rates, insurance, water and electricity bills, downsizers will notice a big difference when they scale back from three or four bedroom homes to say one or two bedroom apartments or properties. While less space means less areas to cater and pay for, who doesn’t want to minimise their outgoings each month?
Increased Cash Flow – The fun part of downsizing is that the concept is usually around having more cash flow to do as you please with, instead of spending it on the general responsibility of having a larger property. In turn, this is usually linked to a decrease in stress levels, allowing you more freedom to pursue a lifestyle of your choice.
A New Chapter – Downsizers often have a large sentimental attachment to their previous property or dwelling, as it’s often been the family home for many. However, change is inevitable, and downsizing is a way to take control as to what the next era of your life looks like or resembles. Embrace that new chapter, as it comes for all of us anyway.
Take The Stress Out Of Selling Property
A completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.
