Property Hub - Investment Insights & Inspiration - Realty Talk Vault: Downsizer property preferences

Episode Date: February 15, 2023

We bring you another classic Realty Talk episode from the vault, which was originally published on April 26, 2022, but is still just as relevant today. Recent data reveals that 1.62 million Australian households are looking to downsize their homes over the next 5 years, but what type of properties are they looking for and how do they navigate the financial roadblocks to make this transition? Mark Macduffie from Downsizer.com joins us to talk about solutions to this growing challenge. RealtyTalk 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 to get every RealtyTalk episode delivered to you each week for free, and also get full access to Get Invested, the leading podcast for Australians who want to unlock their full ‘self, health, and wealth’ potential and get inspired by the stories of investors, founders, and entrepreneurs. Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media.  Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Hi and welcome. Now, according to recent data analysis by Digital Finance Analytics, over 1.62 million households are looking to sell down their current property within the next five years, with over 98% of them aged over 50. Now, almost half of them currently own properties valued in excess of a million dollars, and 71% of them are looking to downsize into improve lifestyle properties that cost less than a million dollars. But what type of properties are downsizers looking for and how can they navigate the considerable financial roadblocks to make this transition? To discuss this, we're joined by the MD and co-founder of Downsizer.com, Mark McDuffie. So welcome back to the show, Mark. Thanks, Bushy. Glad to be back.

Awesome. Now, Mark, when people downsize, what kind of dwelling is most appealing and why? it's a i'm going to answer it with the best of my knowledge right everybody's circumstances are slightly different but what we're seeing is a clear kind of trend um most of the data you mentioned digital finance analytics there at the top of the show most of that data points to 72 percent of homeowners that are mobilizing to downsize have three and four bedroom houses and about 17 percent have three bedroom units the rest are in the two beds mark but what we're seeing is the shift not just to the financial um like obviously you mentioned there is 71 percent are looking for less than a million dollars of value or property value but it's more about

ease of you know you know ease of access perhaps there's health issues that are on the horizon that people are thinking of convenience you know this thing called covid's been around for two years now and I think that there's a whole demographic of people that are thinking you know when the gates open I'm going to go out and I'm going to travel I'm going to see the world so downsizers are looking for that kind of apartment or community style living where they can have convenience low maintenance they can lock up and they can go traveling away for a period of time and then inside the floor plan is also changing as well a number of the developers that we're working with have seen this for probably five, six years

and they've started developing floor plans that are really targeting this demographic. Large dining space, large kitchen for entertaining, you know, spare room, maybe a study from working from home. So it's kind of a couple of different factors, ease, access and for the appropriate lifestyle, right? Yeah, exactly right. So let's sort of narrow our focus a bit onto the off-the-plan area because there's been sort of mixed news around the pros and cons of off-the-plan in the past.

So what are the specific advantages of buying off-the-plan when you're downsizing as you see it? So as we see it, obviously, we have a specific view. And this is really, you can choose an awful lot. There's more and more developers that are designing and building, as I said, for this demographic. And the developers that we talk to are increasingly seeing the value of a downsizer over a first-time homeowner. And what that means is that downsizers are actually, I think, in a really strong buying position. right because if they're asset rich cash poor and they walk into a showroom with a developer that is a safer bet for a developer from a settlement perspective and they're very responsive

to that so really the benefits are multifaceted right you can choose an apartment off the plan you can maybe make some customization you know you can really think about planning what you're going to do with your lifestyle and you can stay in your current house until the new one's ready So that convenience and you're not moving and renting and, you know, that's one aspect of it. But there's also more advantages from depending on which state you're buying in, there's stamp duty concessions, more and more incentives are making it easier and easier for downsizers with assets to unlock that and unlock the next phase of their lifestyle. So for us, it's really about choosing the convenience and the property that you want and the floor plan that you want that suits your lifestyle in a building or a community that suits you. Yeah, love it. So from the Downsizer.com perspective, because a lot of people have a fear for anything that they can't touch and feel, is the due diligence process that you bring to the table as Downsizer.com give them some extra insurance and assurance, if you like, in terms of making sure that they're buying a quality property from a quality developer?

Can you just quickly touch on that for us? Yeah, I'll certainly try to. One of the things that we've observed in the property industry is obviously there are bad actors in every industry, right? But I actually see a benefit in the historic bad actors that perhaps have, you know, we've all seen different sensationalist headlines like the Opal Towers, for example. but the really great work that david chandler is doing as the new south wales building commissioner i think now you is a good time to buy because of the work for two and a half years or so that david's been in this position i think um really buying but build it by a confidence back to off the plan by making sure that there's you know this isert uh qualification has been a partnership

with the new south wales building commissioner and equifax yeah downsizer.com are actually one the first companies to use that isert on a listings platform so one of our developers in new south wales and a quick plug for helm properties in in mossman they were one of the first three rated with the new buildings rating star classification so they're four and a half stars working towards five stars but really about embracing property developers that we're talking to we screen them to make sure that they're of that certain there's no phoenixing and that practices should be frowned upon and is it being eradicated by the changes that david is doing so we kind of screen developers to make sure that the quality the history of that developer is

giving the buyer confidence but you're right they want to touch feel see a lot and we're seeing a lot of developers that almost hold some stock back until the property is out of the ground and downsizers can actually eyeball uh you know what does it look like on level four for example yeah yeah and i love it i mean i'm very familiar with it as a used to be an architect for many years so being able to visualize and and see things on plan is easy for me but for a lot of people it's it's a a bit of an unknown so it's really good that you're bringing some extra clout to that process to make sure that the the appropriate quality and scale of the developers is producing quality product that the downsizers can have confidence in so okay so um another a question around this

then so what are the barriers to downsize sizes trying to purchase a new home before they've sold their current home and and how can prop tech solutions help this yeah thanks a great question um the barriers that we often see are most often for this cohort of individuals they don't they're not they don't have liquid cash sitting in a savings account because they're if they're beyond their retirement age or they've stopped working they're kind of drawing down on super in their savings and you know they've got lots of assets in their bricks and mortar but they don't have they're buying a two million dollar unit off of plan they don't have two hundred thousand dollars sitting around doing nothing so that deposit is a barrier and we believe that downsizer.com

shouldn't have to find um you shouldn't have to put that deposit in a low interest escrow account whilst if you if you've got a house worth three or four times the one you're buying so we help screen and qualify buyers for that reason to remove that barrier but you've also touched on one aspect of it it's trust right that to me is a big big barrier for this demographic to perhaps it the last big buying decision of their lives yeah and you see all of the press that we just referenced before so we're trying our very best to educate and select the right developers work with the building commissioner and also we our agents are screened by rate my agent so two kind of industry ratings that give you comfort as a buyer that you're the property

that's being represented on our platform um is is is a safe bet if you like and i think the third thing that i would throw in as a dance downside as a barrier perhaps is is you know if you lived in a place for 30 years you know this the suburb well you go and drink the coffee at the same place and you know everyone. And they might not leave stock in that location for you. So you're almost kind of landlocked by the fact that there is no stock in the suburb that you're looking for. So I think there's the disruptiveness of changing your life

after 25 years can't be underestimated. And the more that we can do along with developers and agents and everybody in the industry to try and give that buyer confidence back off the plan, the better. Yeah, 100% agree. Now, look, I really want to thank you for these quite eye-opening insights, Mark. And thanks again for your time on the show today.

Thanks for having me. Take care. Thank you, Mark. Well, there you have it. If you're considering downsizing or you know someone that is and you want to find out more, reach out to the team at downsizer.com.

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