A new report has identified a significant opportunity to free up larger family homes across Australia, but stamp duty, moving costs and a shortage of suitable properties are making it harder for older Australians to downsize.
Almost nine in 10 Australian households aged 55 and over have at least one spare bedroom, highlighting the potential for downsizing to unlock existing housing stock at a time when the nation’s population is ageing and housing supply remains under pressure.
The realestate.com.au GemLife Downsizing Australia 2026 Report found 88 per cent of households in this age group have at least one unused bedroom, while 60 per cent have two or more.
By comparison, just 32 per cent of households aged 25 to 54 have at least two spare bedrooms, pointing to a substantial mismatch between the size of homes occupied by older Australians and the needs of younger households.
The findings suggest that creating more suitable housing options for downsizers could help bring larger family homes back onto the market, without relying solely on new construction to address Australia’s housing needs.
The report draws on responses from more than 2,100 buyers who participated in the realestate.com.au Property Seeker Survey, including respondents aged over 50 who were looking to downsize.
It comes as Australia’s demographic profile continues to shift, with 29 per cent of the population currently aged 55 or over, a proportion projected to reach 35 per cent by 2050, according to Australian Bureau of Statistics data cited in the report.
For real estate agents, the findings point to an increasingly important market segment, but also highlight the obstacles preventing potential sellers from making their next move.
Realestate.com.au Senior Economist Anne Flaherty said Australia’s ageing population would require a rethink of how existing housing was being used.
“Australia is entering a period of demographic change, as older Australians make up an increasingly large share of the population, but there is a gap between housing supply and downsizing requirements,” Ms Flaherty said.
“Encouraging older and smaller households to downsize will ensure we meet the needs of our aging population and use the housing we currently have more efficiently.”
She said the decision to downsize was not simply about reducing the number of bedrooms.
“Downsizing is more than simply moving into a smaller home. For many Australians, it is an opportunity to trade maintenance and unused space for greater comfort, convenience, and freedom.”
One of the clearest findings is that downsizers are not necessarily looking for the smallest property available.
Around half of respondents identified two-bedroom homes as their preferred option, while more than a third wanted three bedrooms, reflecting the importance of retaining space for visiting family members, guests and everyday living.
However, the report identified a gap between those preferences and the types of homes being delivered.
Of the properties built between 2016 and 2021, just under half were one- to three-bedroom units or houses, suggesting the availability of appropriately sized housing remains an important consideration for older Australians contemplating a move.
The findings also challenge the assumption that downsizing decisions are driven primarily by price or a desire to release equity.
Low-maintenance living was the leading priority, nominated by 79 per cent of respondents, followed by security and peace of mind at 62 per cent and proximity to amenities at 61 per cent.
Many respondents were also reluctant to give up features they valued in their existing homes.
Garden or outdoor space was difficult to sacrifice for 40 per cent of downsizers, while 37 per cent were concerned about losing garage and storage areas and 34 per cent wanted to retain space for guests or grandchildren.
The results suggest that the challenge for agents and developers is not simply finding smaller properties, but identifying homes that offer a practical alternative to the family residence.
Some buyers were also prepared to spend more to secure particular features, with 22 per cent willing to stretch their budget for air-conditioning, 19 per cent for a safe and quiet neighbourhood and 18 per cent for solar energy.
Lifestyle considerations featured prominently, with 28 per cent valuing a home that made travelling easier, 19 per cent wanting more time for hobbies and 14 per cent prioritising opportunities to build social connections or make new friends.
GemLife Managing Director and Group CEO Adrian Puljich said the industry needed to focus more closely on what older Australians hoped to gain from moving, rather than what they were leaving behind.
“The conversation around downsizing needs to shift to what people gain in the transition,” Mr Puljich said.
“People come to the decision at different stages of life, from different places and for different reasons, but they generally have one thing in common – they’re looking for greater freedom to live life on their terms.
“They want lower maintenance living where there’s still space for family and friends, connection, independence, security, and room for the things they enjoy, like travel.”
He said land lease communities were increasingly catering to those preferences.
“The land lease sector has become one of Australia’s fastest growing housing models as it’s designed specifically to hit those benchmarks, and we need to ensure we continue keeping pace with the significant demand, particularly as our population continues to age.”
Despite the potential benefits, the report found significant barriers continued to discourage older Australians from selling.
Almost three in 10 downsizing respondents, or 29 per cent, identified the hassle of moving as a deterrent, while 26 per cent cited stamp duty costs associated with purchasing another property.
Those findings suggest transaction costs and the practical challenges of relocating can influence whether older homeowners decide to remain in properties that may be larger than they need.
The report also highlighted the influence of adult children on downsizing decisions, adding another dimension for agents working with older vendors.
Among downsizers with adult children, 66 per cent said their children had some influence over the decision to move.
For agents, that means conversations about selling the family home may involve more than the property owner, particularly where decisions about location, accommodation and proximity to family are concerned.
The research points to a broader opportunity for the real estate industry as Australia’s population ages.
While new housing construction remains essential, making better use of existing homes could also help address the mismatch between household sizes and the properties they occupy.
However, the findings indicate that unlocking that supply will depend on more than persuading older homeowners to sell.
It will also require suitable housing alternatives that deliver the space, security, convenience and lifestyle benefits downsizers are seeking, while reducing the financial and practical barriers associated with moving.