Want to save money on your mortgage?
The first question to ask yourself, experts say: “Do I really need such a large space?”
New data from Muval shows, with interest rates rising, the cost of living rising and life’s priorities changing, more and more South Australian families are downsizing – and saving significant money in the process.
Muvall CEO and founder James Morrell said it’s not just about getting people into tiny homes, but about making smart financial decisions in an expensive housing market.
If we look at South African data, the biggest savings to be made can be found in the Walkerville council area, where those moving from a four-bedroom house to a three-bed house open $508,000 in equity, those who downsize from a three-bed to a two-bed house $568,000 and those who go from a two-bedroom house to a one-bedroom house $568,000. $430,000.
The city of Burnside had the second highest savings at $339,000, with the biggest savings going to those moving from a three-bedroom to a two-bedroom home, where the difference is $546,000.
South Australians can save a lot by reducing prices. Photo: Brenton Edwards
Unley council residents save the most when moving from a three-bed to a two-bed – a difference of $562,000 – and an average saving of $324,000 while Adelaide city council saves an average of $296,000 by downsizing.
The main difference here was for those moving from a two-bedroom to a one-bedroom.
Mr Morrell said the biggest obstacle for people not to downsize is the emotional and practical challenge of letting go of property.
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“Many people feel overwhelmed by the organizing involved, especially if the items are of significant value or have been collected for many years,” he said.
“That exhausting decision, figuring out what to keep, sell, donate or keep, often makes the whole process feel overwhelming, which can lead people to put it down.”
He said, compared to other Australian cities, South Australia has a strong “stay-put” mentality.
“South Australia has one of the highest levels of empty nesters in large family homes, and only a small proportion of eligible homeowners have taken steps to downsize,” she said.
“Many homeowners live in desirable, well-developed properties and feel no need to move, while factors such as stamp duty costs, the limited availability of suitable smaller homes, and the desire to maintain a lifestyle continuity all contribute to making housing less desirable.
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Muvall CEO and founder James Morrell. It is provided
“It is also noteworthy that South Australia has the second highest proportion of people aged 65+ in the country, after Tasmania, adding an important layer to this dynamic.
“In this age group in particular, there can be a lot of mental confusion about movement.”
Mr Morrell said what stood out from the data was how limited the reduction activity was in South Australia compared to the number of people actually in a position to reduce.
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“While SA has a large proportion of established home owners and “empty” families, he said.
“This suggests that the issue is not just ability, but reluctance – people are staying put even if their housing needs have changed.”
Looking at apartment dwellers, Adelaide city council residents downsizing from a three-bedroom to a two-bed can save $320,000.
In the Burnside council area it is $182,000, and in the Adelaide Hills council, residents downsizing from a two-bedroom to a one-bed can save $184,000.
Retirement Living Council Director Daniel Gannon
The chief executive of the Retirement Living Council, Daniel Gannon, said the incentives were needed to encourage older Australians to “equally fit” to ease the pressure on all housing, health and aged care, and free up housing stock for those looking to enter the market or expand.
As well as scrapping the $258,000 rural purchase price limit that shuts out 96 per cent of homes in the government’s Commonwealth Rent Assistance scheme – a law he describes as a housing market surplus – he wants to see a limit on the age pension asset test for single, ‘income-advanced’ homeowners, couples.
“These reforms will encourage older Australians to move into safe, suitable housing without being penalized for making sensible financial decisions,” he said.
“Together, these reforms could unlock 60,000 homes across the country, help older Australians escape housing stress, and free up homes for desperate young families.”
