Cash poor, households downsizing: 12% of Australians plan to sell their homes

A growing number of Australians are planning to downsize their homes, with some hoping to access the stored wealth, according to new research by Finder.

A new nationally representative survey of 497 homeowners revealed 1 in 8 Australians (12%) – equivalent to more than 600,000 households – are planning to downsize to a smaller property in the next 12 months.

The research shows nearly 300,000 Aussies (5%) want to downsize to less costly housing to unlock equity, while more than 200,000 households (4%) are downsizing as they don’t need as much space as they used to.

The remaining 3% (162,000 households) are downsizing – but just temporarily – to allow them to save money.

With interest rates expected to increase again this year and with living costs rising, it’s getting more expensive to own a home in Australia.

Sarah Megginson, senior editor of money at Finder, said housing costs leave many people with little money left over after mortgage repayments.

“Thanks to the recent house price boom, plenty of Aussies are ‘house rich’ but ‘cash poor’.

“Downsizing is a way to potentially lower your housing costs, if you can find less costly housing that still suits your needs. But you have to be mindful of the costs involved in buying and selling, like stamp duty and real estate commission, because they can really erode the equity you’ve built up.”

The research found men (6%) were more likely than women (4%) to downsize to free up equity.

Megginson said thanks to property price spikes during the pandemic, house values had grown up to hundreds of thousands of dollars in some areas.

“That does little to alleviate affordability problems for those who have a mortgage, so many are looking at cashing in on their home.

“By moving to a smaller property homeowners can access some of that untapped wealth.”

Megginson said another option is to rent out spare rooms in your home.

More than three-quarters (79% of households) have one or more surplus bedrooms according to the Australian Bureau of Statistics.

“That rental income can help with mortgage repayments if you are not ready to downsize,” Megginson said.

Are you planning to sell your property to downsize in the next 12 months?
No, I don’t plan to move 80%
No, I plan to upsize because I need more space 8%
Yes, I want to unlock some equity 5%
Yes, I don’t need as much space as I used to 4%
Yes, but just temporarily to help me save money 3%
Source: Finder survey of 497 homeowners, March 2022

Looking for the best home loan deals on the market? Check out the winners of the Finder Home Loan Awards 2022.