After two years where Australians were scrambling for larger homes, a new survey has found one in eight are now looking to downsize as higher living costs start to bite.
According to new research from Finder, 12 per cent of homeowners, or 600,000 households, are planning to downsize to a smaller property in the next 12 months.
Of those downsizers, nearly 300,000 homeowners (5 per cent) want to unlock equity, while more than 200,000 (4 per cent) are downsizing as they don’t need as much space as they used to.
The remaining 3 per cent (162,000 households) are downsizing – but just temporarily – to allow them to save money according to the survey.
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.
Senior editor of money at Finder, Sarah Megginson said rising housing costs and interest rates are leaving many households stretched financially.
“Thanks to the recent house price boom, plenty of Aussies are ‘house rich’ but ‘cash poor’,” Ms Megginson said.
“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.”
Ms Megginson said thanks to the property price boom during the pandemic, fuelled by low interest rates and government stimulus, 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,” she said.
“By moving to a smaller property homeowners can access some of that untapped wealth.”
With more than three quarters (79 per cent of households) having one or more surplus bedrooms, Ms Megginson said another option is to rent out spare rooms in your home.
“That rental income can help with mortgage repayments if you are not ready to downsize,” she said.