Rightsizing (also known as “downsizing”) means selling your existing family home and buying a smaller one nearby or moving to a different area with lower median property price.
Many considerations could prompt you to rightsize into a different home for the next phase of your life. If you’ve owned your family home for some time, you’ve likely built up plenty of equity and seen some substantial capital gains. For example, you might be living in a property in a major capital city worth $2 million unencumbered and you could choose to move to a regional area such as Wagga, Toowoomba or Mandurah where you can easily buy a property for less than half that amount. With markets on the move, now might be a suitable time for you to reap the benefits of these gains.
Perhaps you’re an empty-nester living in a high-cost capital city such as Sydney, Melbourne or Brisbane. Moving to a smaller home in a less expensive regional or coastal area could provide significant cost and lifestyle advantages. Or maybe the effort required to maintain a sizeable four-bedroom home is not worth the hassle now the kids have left home.
Too much upkeep is a trigger for many Australians to rightsize. Having a big yard with a 22-yard cricket pitch or swimming pool was great when the kids were growing up. But now you never use the pool, while the previously manicured yard looks more Amazon rainforest than a botanical garden. Overdue maintenance, whether it’s to the garden, pool or the home itself, is going to impact your property value over time negatively. So, while you may love your existing home and have many happy memories, you need to be realistic about your ability and willingness to maintain it.
A rightsizing decision could also be driven by the desire of you or your spouse to retire. You love your existing home, but suddenly it seems like too much space for just two people. Apart from the costs of maintaining the property mentioned earlier, there are expenses such as the insurance, rates and utility expenses that will incessantly carve chunks from your wealth. At this point, saving some costs by rightsizing into a more suitable property begins to look appealing.
Maybe you’re considering a new lifestyle with travel a more significant part of the plan. By downsizing to a smaller or more affordable property, you can free up some extra cash as well. Alternatively, if you have a mortgage, by downsizing, you can boost your cash flow in retirement, pay off the debt and live a more financially manageable lifestyle.
But you must do it right, and this is where talking to a local Raine & Horne agent about the benefits of downsizing into a different home when the time is right should be an early part of your decision making.