Property Hub - Investment Insights & Inspiration - Get Invested: Mark MacDuffie & Michael Blythe on the downsizer opportunity

Episode Date: February 17, 2023

How can Australia's ageing population free up much needed cash for cost of living, retirement and lifestyle goals? Mark MacDuffie and Michael Blythe believe downsizing is a key solution. Financial stress compounds in later years, as retirement comes in to focus and lifestyle needs and goals change. Throw in a pandemic, rising interest rates and volatile markets, it's easy to see why older Australians are feeling the pressure.  Baby boomers have a huge influence on housing market conditions. They make up about 25% of the Australian population but own more than half of the country's national wealth, with most of it tied up in their homes. This means they're asset rich but often cash poor. But 'downsizing' or 'rightsizing' is easier said than done. Thankfully, our guests, Downsizer.com CEO Mark MacDuffie and economist Michael Blythe are solving the these challenges, for individuals and the economy at large.  The duo reveal fascinating research and insights about the downsizing opportunity, and much more. Find out more about Downsizer https://www.downsizer.com/ Three easy ways to Get Invested right now: 1. Subscribe to this podcast now, if you haven’t already, and get the inspiration delivered to your podcast feed each week 2. Get a copy of my book, Get Invested, for FREE, and find out what it takes for you to invest in living more, working less. Go to: https://knowhowproperty.com.au/get-invested-free-ebook  3. Join the Get Invested community. Each month Bushy sends a free and exclusive monthly email full of practical ‘Self, Health and Wealth’ wisdom that our current Freedom Fighter subscribers can’t wait to get each month. Just visit bushymartin.com.au, scroll to the bottom of the page and sign up. About Get Invested, a Property Hub show Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Get Invested is part of the Property Hub podcast channel, your home for property investment insights, inspiration and stories from Australia’s top property experts, investors, leaders and analysts. Subscribe now on Apple Podcasts, Spotifyand Google Podcasts to get every Get Invested episode each week for free, and also get full access to RealtyTalk, Australia’s top online property show for red hot property investing news and insights direct from property industry leaders and influencers. Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, show producer Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media.  For business and partnership enquiries, send an email to: [e-mail] omnystudio.com/listener for privacy information.

What we've really seen since the end of World War II was this kind of big bulge in the population moving through. It was triggered initially by that post-war baby boom, but there are other parts to the story as well. And in particular, that coincided with a massive and, as it turned out, permanent increase in migration to Australia. So all of a sudden, we're injecting a lot more people into the australian economy and they all needed to live somewhere which is why that population bulges has moved through has had a pretty significant impact on the on the australian economy pushing up prices pushing up construction activity pushing up the demand for the infrastructure that you need to make new suburbs and housing in general work so it's had a huge

impact on the economy. We're now at the point, in fact, we're beyond the point where, of course, that population is now moving into the older age brackets. And that's bringing with it, I think, a whole series of challenges for homeowners, for the people who build those those homes for governments and for the the economy and i mean really the bottom line that is that population bulge is increasingly living in houses that are inappropriate for them that are costing too much to maintain at a time when their their incomes are being squeezed by a whole range of factors as uh as well and so that is going to require a change in in focus and i know a lot of people in fact you know something like 80 to 90 percent of people want to stay where they live

right now and you can understand that they know the local area you know they like the house they're in and the the rest uh but out of that 80 or 90 percent only about 60 percent of them actually have a plan on how they're going to achieve that so a lot of people have this idea of what they want to do but they've got no idea how they're they're going to to get there and uh you know this is something that we really need to focus on not in 10 years time but kind of kind of now because it's happening uh now a lot of it i suppose comes down to this um uh downsizing question of how do you achieve it i mean again it's pretty clear from the surveys that when people downsize what they want is a smaller place well downsizing that makes uh makes sense of

course but they they also want something that's new and that something is going to be low maintenance without the the big garden and the and the like so also something close to where they actually live now what that means of course is that when they come to downside downsize they may be buying something that's cheaper than their current house is worth but it's still a large amount of money to find uh when they're kind of straddling that period between moving from their current house to when the new one that they want is is actually actually built how do you fill in that affordability gap while you're in that transition transition phase and you know again where the um the ideas that downsizer have i think are going to be an important part of the solution to that

affordability issue. We help unlock this asset-rich cashboard downsizer cohort and help them get into their next house without the need for finding a cash deposit. Welcome to Get Invested, the leading weekly podcast to help you unlock your full potential and enjoy your version of sustainable success that lies at the intersection of your three L's, yourself, your health and your wealth. I'm your host and guide Bushy Martin and each week we go deep sharing great conversations with proven experts in all walks of life including the best investors, property experts, analysts, leaders, founders, sports stars and health gurus to uncover their secret know-how on where they invest their time, their skills and their money

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Hi, Freedom Fighters. How can you eliminate financial stress in your later years? And have you ever thought about what impact the ageing population and baby boomers in particular are having on the economy and housing conditions? If not, you're going to be quite surprised. and if you're a boomer or perhaps your parents are what challenges are they having in either affording to stay in the family home or being able to overcome the considerable financial hurdles to downsize or right size into more appropriate housing that better reflects their needs and improves their lifestyle cash flow because the golden handcuffs of the family home and this

growing housing transition log jam is having a significant impact on the availability of housing and general housing market conditions, whether we're aware of this or not. So let me illustrate this a bit for you. Baby boomers aged between 58 and 76 currently make up about 25% of the Australian population, but own more than half of Australia's national wealth, with most of it tied up in their homes. And according to recent data analysis by Digital Finance Analytics, just under 1.7 million households are looking to sell down their current property within the next five years, with over 98% of them aged over 50. And the majority of these boomers are looking to free up equity, improve retirement lifestyle, and live in better low-maintenance community

facilities. Many of these are asset-rich and cash-poor, but aren't able to downsize because they're locked into their current homes and it's been too difficult and too stressful to free up the deposit required to secure their new home without selling their current home first. So for a long time funding this downsizing deposit has involved the difficulties of bridging finance, deposit bonds, dipping into savings and investments or suffering the considerable disruption and upheaval of having to sell the family home first and then renting for a period before they can then move into their right-sized home. And all of this is creating a logjam effect

that's restricting housing turnover and impacting on the entire housing landscape. So what are the solutions to this big and growing problem that's not only hamstringing the bubble of boomers, but the ripple effect is flowing onto housing availability and affordability for all of us? Well, this is where today's special guests come to the rescue. Downsizer.com has recently introduced an innovative solution to this chain of dilemmas

by creating an evolved option that doesn't compromise right-sizers' lifestyles. Downsizer.com has brought the right people together to unlock a system where downsizers enjoy the benefit of securing a brand-spanking-new fit-for-purpose home without paying a cent until settlement. And at the same time, on the flip side, developers never lose money on sales, and real estate selling agents are able to refocus on offering their best value to downsizers. So it's a real win-win-win all round. And Downsizer.com are creating a future of wider opportunity with less compromise, where downsizers can right-size in a safe and secure way while no longer having

to worry or feel reluctant about the perceived risks of buying off the plan. So to unpack this seismic shift that's benefiting the entire housing market, we're joined by one of the co-founders and CEO of Downsizer.com, Mark McDuffie, along with their economist in residence, Michael Blath. So welcome and let's get invested, Mark and Michael. Great to get you on board. Is that sort of an issue that people are sort of peripherally aware of, but really haven't got their heads around yet in terms of the overarching impacts?

And we're going to dive into that shortly. But before we do that, I'd love for each of you to sort of give us a bit of a rundown on who you are what you do what you do differently and most importantly why you do what you do thanks bushy um well as you said my name is mark mcduffie i'm the ceo of downsizer i'm my background is 30 years of digital technology design development in five countries before downsizer i led a large team in commonwealth bank here in australia their digital development team helping create new experiences for their institutional and business banking customers what we do now though is i've i've i shifted away from large corporate and

took a lot of the skills uh design and customer center design-led experience that i had in my career and i put this into this new venture which is downsizer.com and what we do differently is as as you've alluded to, is we help unlock this asset-rich, cash-poor, downsizer cohort and help them get into their next house without the need for finding a cash deposit. And why I do it is, I mean, I guess the personal reason is I'd worked for 27 years in large corporates and worked incredibly hard and had a few health issues.

And the health issues kind of made me re-evaluate how I was working. And I've decided to leave large corporate and start in an innovation space using technology to create new opportunities to solve real problems and downsize it with that. So that's me. Thanks. Yeah, brilliant. Good intro. Michael, can you give us a bit of a rundown on yourself? Well, I suppose I'm a little bit unusual in the sense that I haven't had many jobs over my kind of full-time working career. I've really only worked at two places. One of those was the Reserve Bank. And like Mark, I also spent a long time at the Commonwealth Bank. I've got to say the Reserve Bank for economists is a fantastic place to work.

There are some very smart people who work there. It's a fantastic learning environment when you're first starting off. And of course, it gives you real insight into how economic policy and monetary policy in particular actually works and is made in Australia. That's very valuable insights to have as an economist, given how important what the Reserve Bank does is for the economy more broadly, as we're all seeing at the moment with rising interest rates and inflation concerns and the like. And of course, moving to the Commonwealth Bank, I think, added a real world element to that. Obviously, one of the biggest

companies in Australia and the opportunity to see how a big company actually worked, uh how it had its own influence on the the economy uh was a fascinating uh process in itself uh you know the great thing about my job is that it was different uh all the uh all the time when i was at both places different issues keep coming up uh issues that you would never expect to see i mean who would have thought we'd have to worry about a pandemic and what it might mean for the economy and how policymakers were going to respond to that and when i look over the years we've had recessions we've had booms we've had financial crises and they all kind of come out of the scope as an economist so as i say it's never been a dull moment yep no question about that

some pretty interesting backgrounds in that context the unanswered question there michael is is why do you do what you do well i think it's just the variety i mean the financial system the policy side of things it impacts on all aspects of what we do there's a feedback loop the other way i mean what happens in the economy then drives policy responses it drives how businesses operate and the and the like and i think it was just that level of interest that that was maintained by that variety over the years. And, you know, I'm kind of happy to continue that with the work I've been doing for Downsizer on the demographic side

of things in recent times. Yeah, brilliant. And what I love about what you're collectively doing is with your understanding, Michael, of the economy and how all of the moving parts actually operate, able to then understand what that means to the boomers and the downsizer community and feeding back into what Mark is then doing to help overcome some of those challenges. So which we'll certainly be getting into shortly. Sort of what I'd like to do now, gentlemen, to get a bit of a sense of your own journeys from

an investment sphere, if we can, is to sort of share with us what your own personal investment journeys have been so you know whatever you invested in when and why and what sort of a an investment strategy do you apply to that so mark we might kick off with your thoughts on that yeah thank you um you know i haven't really been a heavy investor in equities or securities i think if i look back since i was able to invest in my early career and as you know right the way through it the consistent thing and this is not just because i'm in in a property technology business the consistent thing for me has been investment in property um in different countries where i've worked i've either owned property or invested

in property and and that has been a consistent thread for me throughout and then i guess dotted across um different phases of my career when i had perhaps more disposable income it would it would be I had a vested curiosity interest in and curiosity in technology and emerging, you know, transformative ideas that, you know, could be worth zero or could also be worth 100x, right? So I do remember a few highlights early in my career when I was investing in different technologies, different phases of, you know, technology development. So I think for me, yeah, it's been, I would say, mostly property at different phases of my life and then a little bit of emerging technologies. Yeah, so you've got the safe and secure with the throw of the dice

on the other, as you've well said. But what about yourself, Michael? Where's been your investment focus in your journey so far? Well, I think like a lot of people, I probably haven't paid enough attention to that side of things over the years. And what it meant is really, I suppose, by default that I became a buy and hold type investor. And looking back, I think that's actually been a pretty good strategy when you think about the sort of traditional investments that all paths we all go down on that front, you know, a house to live in,

maybe an investment property, equities, you're in superannuation because you kind of have to these days. I mean, all these sort of things have turned out to be pretty good places to park your money without, as I say, probably me trying to outperform the market, if you like, by having a more active investment strategy. So definitely buy and hold and property has been a great mix over my time. Yeah, fantastic. And it's interesting, the buy and hold strategy often works better than the more active exercise you know you've probably heard of this as well but i read an article a while ago that sort of demonstrated in no uncertain terms that you're better off dead when it comes to investment because as long as you've invested then getting

away from a good investment and not fiddling with it often produces better results so a good call on that front so i guess um sort of moving on from there and getting a bit of a sense of some of the challenges that you've both had. Mark, let me start with you. What's been the most challenging event in your life so far and what have you learned from it and what has it led to? Thank you. I think it would stand out for me.

I've had a number of significant health issues over the last decade and I went undiagnosed for four or five years and carried that to the office every day and worked in a stressful environment you know 60 odd hours a week without really knowing what was going on and then the wheels fell off I something had to give and I felt you know I had a significant mental and well not mental but physical crash that you know has had an impact on my mental health as well so that really put things into perspective for me and and led to me changing my career I mean I was in a very good job at Commonwealth Bank you know the biggest

bank in Australia one of the most innovative every year in Australia and I had to give that up really because my health just couldn't sustain it I left my wife and I left Sydney and we went up to the the hinterland of Byron Bay and and you know had our own space with Peace Love and Veggies and that was that helped me kind of put myself back together again and you know that the greatest learnings from that are you know you can get stuck in a corporate treadmill and lose five years like because you're just on the treadmill and you're just pushing and pushing and pushing and you know the next promotion this and the next revenue target that and the next kpi the other um but actually that has a huge impact on your mental and physical well-being and you know

the financial independence that you think it gives you actually i think is a bit of a misnomer because you know the biggest asset that we all have is our health and if you don't have it what's the point totally agree i uh i rebuilt myself if you like and started on this little concept called downsizer and here we are yeah so yeah given the challenges you've been through makes perfect sense not only in relation to you know doing your own thing but the the area that you're now focusing on given the the large number of us who are shifting through that segment it's pretty interesting and michael can you talk to us about you know what's been your biggest challenging event in your life so far and and what that's meant to you yeah well i mean i suppose i

say nobody dies wishing they spent more time in the in the office but i actually used to quite enjoying my time in the office. And to be honest, if you're an economist and if you are working for something like the Reserve Bank or the Commonwealth Bank, you are kind of fully invested in that because you need to be on top of everything. And it does take a toll. You don't kind of realise it at the time, but the stress levels are there, particularly when unexpected things happen, which seems to be more and more frequently uh these uh these days so uh you know certainly when i was at the commonwealth bank nobody really worried too much about a major financial crisis but of course we had that global financial crisis back in 2007 2008 uh plenty of concerns about

there about what was going to happen as a result of that and people want to know right now what does it all all mean that we were moving into uncharted territory uh more recently of course the the pandemic covered and and so on and nobody really thought much about that what it might mean and how the response should should go but you know once again it was happening it was unexpected and people wanted answers um straight away so you really focused uh on the the issues of the of the time uh that said when i uh finally retired i have to say yeah the focus has has shifted quite a bit uh now i'm obviously still doing uh plenty of things that um uh keep the interest level up and keep me up to date with what's going on and uh and so on but you know having that kind

of free time to actually do something different to typically something involves getting outside as opposed to uh sitting in an air-conditioned office all week has has been good and uh you know looking back now i kind of wish i made that shift maybe a few years earlier than i actually actually did so it's kind of an evolving process there i i think but once again it really comes back to what is interesting and the job itself was interesting but you know it did require a pretty intense effort and focus to perform that yeah i can imagine it would be extremely challenging i would i'd hate to be governor lowe at this point in time michael given the the fact that he's copped, but I've been saying publicly for quite some time now, given the

limited levers at the disposal of the RBA to actually have any meaningful impact on the economy, I think he and his team have done a marvellous job, to be perfectly honest. And if you look at where Australia's position relative to others around the country, we've come out of the whole COVID exercise in really good shape I feel but that's I'm going off tangent there for a minute but what I'm hearing there Michael from what you've just shared with us you're probably the perfect demographic for the downsizer.com movement in terms of what's happening in that that regard so once we start getting into that subject I'd be interested in your thoughts around the thought process that you've been through when you're approaching

retirement what does that mean to where you're living and what you're doing because uh that's that's a a very good living example of exactly what we're talking about today so thanks for that um the other thing before we sort of dive into the uh the whole downsizing arena i'd love to get both of your thoughts on what's been both your best and worst investments and and what you've learned from each of them uh mark can we kick you off on that one um the safe haven for me is property but uh i think that's a cop out so i'll call out a few a few examples from uh early in my life i think i i did back this um needleless injection technology uh back in it must have been uh like early 2000s that was in uh it was waiting for fda approval and and yeah i i backed them for a little

while and yeah that was probably my best turnaround and got out pretty quick and i really loved the idea of it to prevent uh in that the number of nurses doctors and i like that we're getting secondary infections from infected uh blood or disease and this syringe if you like with with negative with with no needle um exposed i think is now commonplace um so i invested in in that early on and i'd also i guess another example of one that went well and then i just regretted afterwards was uh in the rollout of foxtel here in the uk sorry in australia but the equivalent in the uk i backed the chip manufacturer that was doing the the dock you know you know the the set top boxes that we all used to have to get for foxtel yeah redundant now

but we had my dad was a satellite installer and he just kept getting more and more demand right and could see this thing growing and i invested in the uh in the chip manufacturer for the set top boxes i was like this is going to go for ages and it kept going like a rocket ship and then i just held too long and everything like i lost i lost almost everything so i think that's that's more on the uh the buy and hold probably too long uh i let it go too far but i don't know there's two examples from my side that um again it's in the innovation bucket and then probably just held on too long yeah like good good lessons there michael i love your thoughts on what's been your best and worst investments and what you've learned from them as well if you could please

uh well i suppose you know thinking about over the years probably my best investment decision i had some money in the stock market in 1987 and those were very long memories can remember the the big crash that we had around around that at that time and uh and probably the best decision i made then was to keep my nerve for a couple of weeks wait for a bit of a bounce in the market took my money out and then bought a unit with it and as things was luck would run out that was the start of the many house price booms that we've had over the last 30 or 40 years at that point and I still hold that unit and so when I look back that's you know certainly one of the the better choices I made. On the other side of the equation, what always comes to mind,

when I joined the Commonwealth Bank, it was still half owned by the government. Not long after I joined, they sold the other half and there was a special deal for the staff where you could buy 500 shares at a 10% discount, I think it was. So I thought, well, I probably should have some skin in the game since i'm working here and you know i looked at the price of cba shares back then they were 16 i thought oh that's a bit rich so i only bought 400 of the 500 that i could have could have bought and you know of course my uh look at the screen this morning cba is trading i think about 108 dollars so uh yeah it's definitely a lesson in there somewhere as well no let's say you have some pretty good chairs there well look i'd really like to dive deep

into the whole downsizing arena uh given you know as i said at the outset i don't think there are enough uh aussies aware of the impact that cohort is starting to have and and will have as we move forward so michael i wouldn't mind sort of kicking things off with yourself by giving us a bit of background on the context on the boomers and the downsizes impact at the macros or economic level and then filtering down into its impact on the housing market generally, if we can. Sure. What we've really seen since the end of World War II was this kind of big bulge in the population moving through. It was triggered initially by that post-war baby boom, but there are other parts to the story as as well and in particular that coincided with a massive and as

it turned out permanent increase in migration uh to australia so all of a sudden we're injecting a lot more people into the australian economy and they all needed to live somewhere which is why that population bulges has moved through has had a pretty significant impact on the on the australian economy pushing up prices pushing up construction activity pushing up the demand for the infrastructure that you need to make new suburbs and housing in general work so it's had a huge impact on on the economy we're now at the point in fact we're beyond the point where of course that population is now moving into the the older age brackets and that's bringing with it i think a a whole series of challenges for the homeowners for the people who build those those homes

for governments and for the the economy more more broadly and you know how we kind of deal with that latest and I guess kind of final phase of that baby boom bulge is going to be very important for the health of the economy from here and I mean really the bottom line is that population bulge is increasingly living in houses that are inappropriate for them that are costing too much to maintain at a time when their incomes are being squeezed by a whole range of factors as well. And so that is going to require a change in focus. And what really attracted me when I first started looking

at this issue is that I know a lot of people, in fact, something like 80% to 90% of people want to stay where they live right now. And you can understand that. They know the local area. They like the house they're in and the rest. uh but out of that 80 or 90 only about 60 of them actually have a plan on how they're going to achieve that so a lot of people have this idea of what they want to do but they've got no idea how

they're they're going to to get there and uh you know this is something that we really need to focus on not in 10 years time but kind of kind of now because it's happening now totally so there's a uh on an allied exercise michael there's a you know there's been a lot of ongoing discussion around you know the whole housing affordability piece uh how does this all uh come together in the sort of boomer exercises as you see it and and how that's going to play out uh well uh i mean affordability drives many parts of the the story uh the story here and uh i mean a lot of it I suppose comes down to this downsizing question of how do you achieve it I mean again it's pretty clear from the surveys that when people downsize what they want is a smaller place

well downsizing that makes sense of course but they also want something that's new and that something is going to be low maintenance without the the big garden and the and the like so also something close to where they actually live now so downsizers don't like to uh to move um very very far in fact it's extraordinary when you look at the numbers uh around about one-third of the people who move uh move in the same postcode just to give you an idea of uh you know how we're kind of that center for gravity around where we live now actually play plays plays out but what that means of course is that when they come to downside downsize they might be buying something that's cheaper than their current house is worth but it's still a large amount of money to find

when they're kind of straddling that period between moving from their current house to when the new one that they want is actually built so the affordability issue kind of comes through there I think in the sense is how do you fill in that affordability gap while you're in that transition transition phase and you know again where the the ideas that downsizer have i think are going to be an important part of the solution to that affordability issue more more broadly yeah not extremely well said um also interested in your thoughts about the sort of ripple effect that this cohort is is having on the uh housing market and and the economy generally to some degree just so that uh you know we understand it's not just a downsizer problem

it's an issue that's likely to be uh affecting all of us in some way or another have you got any thoughts on that michael uh yes uh i mean again when you look at the numbers what uh stands out and you know you talked about me as being an example of and this kind of baby boomer bulge and i guess i'm kind of at the tail end of that baby boom distribution but like a lot of that group i'm living in a big house where there is two of us now the kids have moved out but while there's two of us we've got four bedrooms and i don't really need those those extra bedrooms there's not a lot i can do do about it it's a part of the reason why we have an affordability crisis in in australia more generally it's not just to do with with interest rates

you know it's the bigger houses that younger fam people with families need are not available because they're full of people like me who, you know, are reluctant to move on just at this point in time. So you'll often hear the quote that we don't have a shortage of houses in Australia, we have a surplus supply of bedrooms, they're just not in the right location. So kind of getting that part right is going to be quite significant. Where the ripples start to pan out from there, I think is that downsizers want a certain type of new accommodation to move to when they downsize. And part of the complaints that you often pick up in surveys is there's a limited amount of stock of the type that downsizers want. So, you know, one of the kind of ripple effects here has to be on the construction side as well.

the people who build new developments if they're targeting that group then they need to be producing the the type of dwellings that people actually want to downsize into we want to make it easier governments well and what we can see then for example is that the it's the older age groups that receive the largest share of government spending by by a long way so it's in all the expensive areas like health, for example, but obviously age care and age pensions and the like become a very or are a very big part of government spending are only getting bigger. That's occurring at a time when debt levels are high and when budget deficits are big. So we're kind of at the point where I don't think we can rely on governments to kind of bail out

older age groups the way that perhaps they could have done in the past because of that so it's going to be very much up to the individual to fund their own own retirement so that's kind of a ripple effect going through there aging populations their spending patterns change quite quite a bit there's an old line about older populations tend to spend most of their money on booze and pharmaceuticals well that is at least partly partly true but they're spending shifts towards more expensive items that's occurring at a time when their incomes are dropping and so that kind of squeeze on the budgets of old houses older householders intensifies there and again that kind of ripple effects into you know the type of goods and

services that we produce for consumers will change as well. And the other issue I just highlight here that I think is going to probably be increasingly significant is that older households are hitting that kind of retirement age, still holding household debt. In fact, that's a surprising proportion of that group. I think something like 14% of people aged 64 to 75 still have a home loan so that home loan still needs to be serviced and still needs to to be paid off at a time when all these financial pressures are coming through as as well so that's a it's potential kind of financial system risk i think or financial stability risk because that group may struggle to keep those home loans payments going and as a lot of people are

discovering at the moment is interest rates go go up if you're having to pay more on the mortgage then you've got less money to spend elsewhere in the the economy so it becomes a kind of economic activity risk as as well and that's really just i think a few of the ripples that we're seeing from this story playing out over over time because it's a big part of the population it's going to have a big impact on the the economy overall which is why i'm kind of very much focused on that uh baby baby boomer group yeah extremely well said that really does put it into context and i i i wasn't aware that that uh home loan percentage was so high 14 is is a lot higher than would have expected and that given where conditions are and they're heading that's certainly going to

put the squeeze on you know on certain terms so mark i know you've uh in our previous discussions put a lot of energy into your downsizer download report which also you know pretty clearly paints out the turf as far as this goes have you got any anything to add from that uh on top of uh michael's comments in relation to the impact that's having on on the on the booms but also more widely yeah i might just build on michael's last comment there about the the 14% that are 65 and above that still have a remaining home loan. We've had a transaction since the last time we caught up with Bushy. We had a 79-year-old who is running out of savings,

has almost no super at all, and has less than $10,000 of savings. His utility bills are the most expensive he's ever experienced. That's a common theme across, everybody can relate to that, right? He can't maintain his garden anymore because he's 79. He can't maintain his house. But he has a line of credit from one of Australia's banks that's accruing interest on a daily basis. He can't make those payments.

It's just accruing interest. So we've helped him secure his next house with zero cash deposit because he has a house that he's been in for 30 years that is worth more than a million dollars. so we've helped him move into his next property easy to maintain two bedroom one apartment close to hospitals utilities tram transport and regain his financial independence that whole cohort the 14 there that have a remaining mortgage outstanding those are the that's one segment of the downsizes that we'd really like to help and we're you know we're actively trying to engage

and as it relates to some of the affordability issues as well the downside is the download which is a is a fairly regular publication that michael is the author of and back in may we pointed to this likely interest rate rises and the inflation impact and that's played out actually a little michael correct me if i'm wrong it's almost on the money for what we'd said back in in may and what we're seeing from our property developers and real estate agents in the market that has really been something that makes them worry about making sales next year so what we're trying to do is educate the downsizers in this cohort which is described that they actually have buying power because their net equity position puts them in a in a stronger position to buy off the plan

than perhaps somebody that's a first-time homeowner that has 10% cash deposit backed by a 90% mortgage. So we're really seeing the property developers and estate agents increasingly look at this cohort as safer buyers. And we want downsizers to recognize that and actually realize they've got buying power. That's a very good point, a very good point.

But Mark and Michael, I'd love you forward Just to expand on a little bit, some of the challenges and the problems that potential downsizers have when it comes to downsizing, because it's certainly pertinent for those who are currently in the midst of it, but it's also a challenge that a lot of us are going to face moving forward. Can you sort of add some shape around exactly what the issues are in being able to physically do the downsizing exercise? Yeah, I can have an initial go at that with some of the thematics that we're seeing. And every situation is everybody's downsizing for different reasons, right? It might be the drivers might be different, but it's still a very emotional exercise, right? So if you're like a large percentage are downsizing for health reasons, they're downsizing for simplicity, they're downsizing perhaps to be the bank of mom and dad. We've seen one of those transactions where, you know, the parents have downsized a large property in Sydney down to two smaller apartments, one for their children and one for them, and to get their kids on the property.

ladder right so the drivers are different and that means that the the barriers are different right um the 79 year old for example that i use as an example he he is landlocked and accruing interest monthly that he cannot maintain and really only has six months of runway ahead to pay for those fees right it's pretty stressful pretty stressful for someone that's you know living on his own his kids and his grandkids live interstate so he doesn't have any a great deal of support right so that is an incredibly stressful exercise and when when we engage with him and first of all helped him secure his future house with zero cash deposit we part of our business model which we don't often emphasize is we help the downsizers sell their current dwelling

at the time to co-inc to to align with the purchase of the new property and this purchaser was like audibly emotional when we told him we would do that for him because it was an anxiety i haven't sold my house for 30 years i don't know where to start so that's an example of you know the emotion that these buyers are going through they've lived in their properties for 20 15 20 30 years some of them and a lot of memories and as michael said the data tells us that they don't move very far that's one of the reasons for that right but if i kind of summarize the where we where we see we can help is the liquidity or the cash deposit to secure that future home is not easy to put your hands on right you need 10 in most cases to to secure your future home

and most people at this phase of their lives don't have 10 in cash sitting around and if they do and perhaps for example we have a buyer that's buying for four years off the plan the alternative is putting 10 cash into a low interest escrow account in a you know an estate agent or a property developers lawyers account not accruing interest so why would you do that if there's an alternative that's cheaper for you more convenient it means you don't have to put your whole 10% cash into a deposit account. So there's some thematics, if you like, from me. Michael, I don't know if you've got anything to add.

Yeah, I mean, what kind of stands out to me is that we spend a lot of time worrying about risks, you know, how far is Reserve Bank going to go? Now, how am I going to afford? This bill was coming up and my wages aren't growing, all those sorts of things. You can understand that. But we spend very little time worrying about the certainties. and you know one of the certainties is that we are all going to get old and all the things that are associated with that but at least until quite recently I think you know there was just always

something over the horizon don't need to worry about that now I can worry about it next week or the next year so you know one of the issues here is really getting that kind of mindset in place when we think about these longer-run issues. We say that these older age groups generally are in a pretty good place financially, in an asset position, because of that kind of buy-and-hold strategy that they pursued with buying big houses a long time ago for a lot less than they're worth now, and that's fine.

But as I say, they're facing the same cost pressures at the moment that everybody else is and there's one aspect of the the time side that hasn't been favorable to baby boomers and that is the superannuation story they tend to have much less superannuation than younger households mainly because they've been in the superannuation system for less time than those younger age groups have they haven't had that kind of compound interest effect working for them as long as today's younger households will will have and again that's something i think a lot of households haven't really focused on so uh the issue to me is really getting that kind of mindset in focus where we start to prepare uh for these things before we

hit that critical age rather than scrambling around uh when you know we've kind of passed the point where we should have done and done something so uh you need a whole lot of things to happen not just the sort of shift in mindsets you need government policy settings to be right to you know encourage um downsets and downsizing you know both the federal level and the the state level as well uh i i think you know we need banks to be part of the party there we need innovative solutions like downsizer again so the bits and pieces are coming together but we yet i think to fully put the uh the puzzle uh completely to uh together there yeah it's very well put uh and i think you raise another issue there's uh you know the the old just in time thing a lot of

people don't worry about until they have to and by then it's it's it's pretty challenging pretty difficult so like like either of your thoughts on you know when should we be starting to think about the downsizing equation and when is actually a good time to downsize in the current environment Yeah, well, that's an interesting question. I suppose the kind of pivot for a lot of people is when they finally retire. And that, I suppose, is probably sooner than it used to be. But you tend to see interest in downsizing increase, I think, in that kind of 60 to 65 age bracket people do start to look ahead and wonder how they're going to fund the lifestyle they want on the one hand and the longer life they expect to have on the on the other but it's also true

to say I think again when you look at the various surveys that the age group where this is tending to come into focus is now a little bit lower as well so that kind of 55 to 60 bracket is starting to see some interest as as well certainly look at the reasons people sell the the downsizing explanation is now the the biggest reason that people say they're they're moving and as you'd expect it's from 55 up the proportion saying they're moving to downsize has just been steadily increasing over the year over the recent uh few a few years yeah well said uh well uh mark i'd love now given that we've you know sort of unpacked quite a few of the issues and challenges associated with this whole exercise uh let's cut the chase and and get you to sort of tell us how

downsizer.com is actually going to help uh solve and overcome some of these and how actually downsize it actually works particularly from the from the uh downsizers perspective we can Sure, thanks. Well, we are a brand new technology business, but we're a unique blend of digital technology and a financial instrument. We allow downsizes. So we qualify homeowners, we qualify their net equity,

and that net equity can be used to buy their next property off the plan. So for example, let's talk about that 79-year-old guy. He has a house worth $1.1 million. He has a line of credit of around $200,000, and he wants to buy an off-the-plan property for $600,000. So we allow him, we qualify his net equity, and we can confirm that net equity to the property developer. And the property developer then, because this is a safer purchaser, we pass the costs or the majority of the costs onto the property developer for our fees. So downsizers that have proven net equity through our platform can buy properties up to the value of their net equity for as little as $1,500.

That is a transaction fee payable to downsizer for processing the application and securing your future home. So to recap, downsizers inquire on properties on our platform. we then qualify their net equity and downsizes with net equity you can purchase up to that value in their future home for zero cash deposit they just have to pay a fifteen hundred dollar transaction fee yeah it's such a a low hurdle and the other benefits of course is they stay in their existing home without having to do that sort of two-step jump if they in a position where unable to secure bridging finance and let's face it since the royal commission on on banking yeah i know firsthand that much more challenging now for anyone over 50 actually to borrow money yet

alone someone who's at their retirement age so certainly overcome some of those issues something i wouldn't mind sort of delving into you as well gentlemen uh you know there's a lot of bad press uh by a lot of people in the industry too as well around the whole buying off the plan exercise uh how you know why are you suggesting that there are specific advantages of off the plan and and and how are some of those poor perceptions overcome in the context of what downsizes.com is doing in that space yeah that's a great question and it's something that we're incredibly sensitive of um first of all we only onboard developers or stock that are developing products or apartments or houses for this downsizer segment right so what that means is

you know wider wider hallways large entertaining areas lots of storage space so we screen our developers to make sure that they're building appropriate or downsizer appropriate products that's number one second thing which i think is actually more important is that particularly in new south wales um there is um you know the new south wales building commissioner david chandler and his team are doing a fantastic job of giving transparency to the property developers and the underlying builders working for those property developers. So David Chandler and his team at the Building Commission have been screening developers over the last two or three years. They now have this scoring mechanism, right? So it's called the iCertification. That looks at

property developers and builders track record, their leverage position, any complaints they have. It's like nine or 10 key metrics. So if you're a property developer in New South Wales, that's going through that building commissioner certification then we like we on when we onboard developers we basically make sure that the new south wales developers are going through that process because it prevents and greatly reduces the risk of for example the opal towers uh in which which really drove this transformation so we were the first listing platform bear in mind there are two very big ones that everybody uses we were the first to use and display the new building certification rating for one of our pilot developers so in february we launched

and one of our foundation partner developers helm properties in mossman they had gone through the this very intensive process for qualification qualifying their you know their business and they came out with a four and a half star rating and we were the first listing site to display that because we recognize that our buyers are increasingly asking for that. I was at a developer event two weeks ago and talking to three different downsizers and they are clearly now looking

at that iCertification, particularly in New South Wales, as an indicator of good product. And what that also means as a kicker is that there's this new insurance that developers can pay, which is 10-year defect resolution, which is game-changing, right?

So we think that the scrutiny that's been put on the development industry is a good thing, and we're celebrating that transparency of ratings, and we'll encourage all developers that come onto our platform to go through that process. So we recognize there's a history and a bit of work there to do, but we will not onboard developers that haven't fit that criteria. Yeah, fantastic. While we're talking about it, I'd love for you to just share since the launch in February how the actual Downsizer platform is going. Yeah, thank you. We launched in February and what's really interesting for me as the leader of a new startup is the consumer traction or consumer interest is really interesting. We only launched in 20 suburbs across three states and we deliberately went small for six months just to make sure everything was working and you know everything was adopted but we we now have

expressions of interest from downsizers and that have a total value of their current dwellings of 1.3 billion dollars that is people that as let's say bushy has been on our site and bushy's filled out all of his his qualification it doesn't take that long to qualify he tells us where he lives where he would like to live and when he'd like to move so we have qualified 1.3 billion dollars of current assets and what's interesting for us two two key things that i think are really interesting um the ratio of downsizing proportion has stayed between 45 and 55 percent since day one which is significant downsizing not you know like for like most of our buyers are saying they want to release about 45 to 55 percent of equity right so that is a significant life-changing

transaction those uh just to be clear that those um downsizes they're buying intentions they're registered with us and they've told us where they want to live and sometimes we have stock for them and sometimes we don't the other thing that's really important so we're going to continue to nurture those downsizers through our pipeline and we we do a lot of hand-holding to make sure that you know we engage bushy when he wants us to engage and we make sure that we are clear on what bushy's looking for if he's a potential downsizer yep what we also see is that we've had on our platform if i only advertised in 20 places so i use we use you know google facebook instagram youtube and we've only advertised in the 20 locations or suburbs that we have stock in

because you know why would i advertise anywhere else but we've had interest registered interest in 720 suburbs nationally that tells us there is a huge unmet demand here of downsizers that are active it just validates the numbers that we we kind of we kind of have but people are increasingly coming to us and the you know the tax incentive for downsizers dropping from 65 to 60 and then down to 55 is only increasing the demand for us so our job is really to try and get the right stock for those buyers to engage and I just finish on I guess a few examples that we've had we've had real a real mix of transactions the 79 year old I've already said but we had I think what was interesting for the audience of this podcast perhaps more is we had a couple in

their 40s that bought off the plan through their self-managed super fund so you know um super self-managed super fund was sufficient enough to take a uh to purchase um their assets in the super fund were enough to to for us to qualify so we qualify the value of the self-managed super fund and the ultimate beneficiaries and they can then use this bond to purchase their next investment property in their self-managed super fund so an interesting use case for it which opens up a whole raft of investors for us we also had a lovely couple that were living separately in their 70s that are now moving in together so they're selling their separate dwellings and they're moving in together to cohabit in their later years which i just thought was such a lovely

story yeah and you know i've only mentioned i think a couple of their sydneys in sydney that have a house worth of, it's probably not your standard downsizing transaction, but a $12 million current house that they wholly own. And they're buying an $8 million property and a $4 million property in the same complex, one for their children and one for them. So a real mixture of different ends of the spectrum and different life stages across our buyers so far. But I just wanted to share those because I think that you know most of them can either relate to their current situation or the situation for their parents or grandparents. Yeah totally and the example you mentioned there just so that you know everyone's getting their head around this it's not

just for downsizers that are at that retirement age you know the couple you mentioned there that they're utilizing their self-managed super fund to invest in a property that may later become the you know the place they live in a great way to take advantage of the platform you develop to find really good properties with really good communities and the style of property that's actually going to suit that lifestyle you made that point earlier but there's a lot of properties that just don't fit the bill well here's here's the opportunity and going back to some of your earlier comments michael in terms of the various levels of government starting to get the head around the fact that we need to have different housing solutions to suit this very sizeable

and growing cohort that's sort of moving through the population. There's some real opportunity there. So thanks for sharing that. Just to close it out then, Mark, if someone's going, well, this is of interest to either me or my parents or perhaps utilizing the Self-Managed super fun. Where do I need to start with downsizer.com and what are the first steps to get underway? Yeah, our site downsizer.com is there. There's a free consult button at the top, so you can reach out to us and book an appointment directly with me or a member of my team, whether you're a family member or the downsizer themselves. It's very easy to book an appointment with us. We'll take you through the pros and the cons. And if you want to have a look through the current

stock that's there it's just like any other list like domain or real estate you can search for the sub if you want we have more than 600 properties for sale there at the moment so have a look we're onboarding new stock every week um so if there's nothing there at the moment that currently fits your criteria you can still register and tell us and we will we'll we'll let you know when one becomes available brilliant great great that's really what our appetite to the whole opportunity the gentleman what i want to do now is switch into what i affectionately refer to as the bushfire lightning round or the ambush round where we hit you with the fastball podcast questions that that you get that everyone asks so to kick that off michael what's your favorite quote and why

well there's a kind of a series of quotes that economists economists tend to like my favorite really is never change a good forecast because it will be right eventually and i think we're on pretty safe safe ground from this aging perspective because we know we're all going to get older it's just a mathematical certainty i like that one that's excellent what about yourself matt i like the imagination is more important than knowledge which is an einstein quote that i've i've lived by a lot of my career in in corporate because i often found that people thought they knew something and would always look down at me but i always thought my curiosity and imagination was better so i i live by that i love it i love it that is a a really good one as well um sort

of switching into the literary field for a minute gentlemen uh michael what's the top book you'd recommend we read and why uh well the one i'm reading at the moment uh i think it's quite interesting it's called the the captain's table uh and it's uh basically about what happened on one of the migrant ships coming out to australia sometime in the the 1950s so uh i suppose it's kind of marking some ways to start this whole uh process that we've been talking about um today it's it's quite funny to read it's a bit like if you can if you've ever read it the the book they're a weird mob you imagine that based on a ship and then you kind of get the the idea but it it just kind of really uh uh brings to mind you know what things were like the 1950s or

at least how i imagine uh they were back in the uh the 1950s yeah it's a good one i'm going to stick that on the kindle as we speak because uh i was a massive fan of their weird mob from years back it's a great read and and as you say in the context of what we're talking about today uh it's really those people that are on those ships that are and now right smack in the the center of of the whole downsizing movement um sort of switching now into the investment sphere for a minute uh mark uh what's the the no actually i haven't asked you your your book sorry mate let me recount that mark what's the top book you recommend we have read of um i've been i read recently uh breathed by james nester which is um basically the the new science of a lost art of

breathing actually understanding how we breathe can make the difference to how you show up in the world and how long you live i didn't i had no idea that i was breathing incorrectly like i've managed to get to 48 years old and i found out recently that i'm breathing wrong yes well i recommend it yeah i totally agree it's absolutely uh bring it right and something that every one of us takes for granted i was a really bad asthmatic many years ago and i was forced to re-look at the whole breathing exercise and did a buteyko russian breathing course which is transformed i went from a chronic asthmatic to not having an exercise for years so that that breathing exercise which is something that a lot of us just take for granted can have a massive impact on on health

on creativity on the whole exercise so yep great read in that regard um switching out to the investment arena uh michael what's both the worst and the best piece of investment advice that you've ever received well probably the best uh piece of advice it wasn't really intended as investment advice it was another book i was reading uh the hitchhiker's guide to the galaxy and this particular book has the words don't panic in large letters on the front the front cover And, you know, when you think about the history of particularly things like stock market crashes and the like, you know, the typical kind of panic reaction is to sell, lock in those low prices rather than kind of sit back and kind of wait for the cycle to run its course. so avoiding panicking i think is probably the best advice that people can make don't don't find that kind of knee-jerk reaction uh when when things uh suddenly not go going according to uh

the plan yeah i love that one and it's clearly something that you've uh adopted yourself uh back in the day yeah when you were sharing with us earlier back in the 80s you rather than panic and and follow the the herd you had the good sense to wait a little bit to allow things to correct themselves before you got out and bought that unit so i'm certainly walking the talk there what about yourself mark i think the best piece of investment advice i've ever had is really stick to your lane which is invest in stuff you understand at eye level and like just taking a punt is because your mate says it the pub is probably not going to work out for you it may well But I like actually looking at things I understand at a high level

and knowing that, you know, it could make a difference in that field. Yeah, extremely well said. Now, I'd always end this session on a talk about any happy habits or rewarding rituals or daily disciplines that you employ that have, you know, contributed most to your success because it's those things like breathing that you've just mentioned, Mark, that tend to build up the patience and persistence that's necessary to achieve any level of success

in the investing arena in particular. So, Michael, what's a happy habit or rewarding ritual that's had a positive benefit for you? I think, you know, I always kind of liked walking and, you know, when being retired, you have a lot more time to do it these days. But I find, you know, apart from the kind of benefits of uh the uh the actual exercise it does give you kind of time to think about some of the issues

that are playing uh playing out and does uh activate all uh all those uh you know friendly components of your brain and so on that do make you feel better so i always feel better by the time i come back after a nice walk than when when i leave and if i happen to bypass a nice pub on the way well that's just an added kind of bonus i love that one about yourself man i think the the meditation and breathing i try and do as regularly as possible um but i guess my personal one at the moment is i always have breakfast with my wife and just you know she gets up earlier if i've got an earlier day but just having that time in the morning just to actually spend some time together and have a chat i love that that's what's helping me a lot on the

them yeah i love it love it mate it's uh it almost become a forgotten art the uh you know just not with your partner but with the family of actually sitting down on a regular basis and having a meal without devices or anything else getting in the road so it's such a simple thing that we've forgotten but um gentlemen uh been very informative today yeah i'll sort of love you both to sort of give me your independent takes on sort of summarizing the conversation in terms what are the key takeaways for aspiring downsizers that we need to be aware of? Mark? Yeah, sure. Thank you. I'd say you have buying power and use it. So it's never too soon to reach out to us and stop worrying and start living.

Beautifully said. Anything to add to that, Michael? Oh, I would say there was a line that one of our former treasurers, Peter Costello, used a few years ago now when he said demography is destiny and i mean he's basically right all these kind of demographic challenges we're facing uh reshaping the economy and we'll continue to reshape the the economy and we need to be prepared for them and uh you know again to circle back around and downsizing it's going to be part of response to those changes and how we deal with those uh those changes yeah extremely well so mate there's no question on on that front uh sort of to bring it to a close then gentlemen uh you know for those that have resonated with

your message uh i assume that just jumping on downsizer.com is the best way to do it and i i know in our pre-chat uh mark that you've indicated a bit of a uh a special offer that get invested listeners can take advantage of do you mind just unpacking that for us yeah no problem at all yeah as i said if you want to reach out downsizer.com you can book a free console or reach out to us but for for your listeners or get invested listeners we're happy to give you a 50 discount on our fees which is typically 1500 we take that down to 750 for your listeners so yeah reach out to us and we'll see if we can help you it's a very generous offer it's something that's already extremely good value so uh make sure that uh when you get in touch with um uh mark and the

team uh you mentioned get invested or or bushy in vain uh to take advantage of that discount and uh and sort of bring that to a close gentlemen really appreciate you sharing your very generous time on the show today and uh looking forward to continuing the journey with you as we uh see the impacts of the downsizes on the economy generally so we're looking forward to having you back to continue that conversation thanks gentlemen thanks it's been a pleasure thanks for getting invested now here's three easy ways you can take action to start making it happen to ensure you build momentum and start living by design not default so that you're following your freedom formula firstly subscribe to this podcast if you haven't already and keep the weekly

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