Melbourne homeowners are unlocking more than $1m by downsizing, as rising costs push buyers into a fierce battle for cheaper homes.
Melbourne homeowners are ditching larger houses in a rush to unlock windfalls of more than $1m, as rising costs force families into smaller homes and ignite a battle for cheaper properties.
New Muvul data shows downsizers in blue-chip suburbs including Stonnington and Boroondara can free up between $540,000 and more than $1m by trading four-bedroom houses for smaller homes.
The cash gains can also be significant for apartment owners.
In suburbs such as Stonnington, Boroondara and Port Phillip, those moving from a three-bedroom apartment to a two-bedroom property can unlock between $330,000 and $630,000 in equity.
RELATED: Shock $98k result for burnt-out shell
Yoghurt giant opens Melb cafe with huge freebie
Block stars’ $920k gamble after auction disaster
Muval co-founder James Morrell said the shift was being driven far more by cost-of-living pressure and housing affordability than lifestyle.
“It’s much more about housing affordability than lifestyle at the moment,” Mr Morrell said.
“People are moving into smaller homes to ease mortgage stress, lower costs and unlock equity.”
Muval co-founder James Morrell says downsizing is now being driven by cost-of-living pressure rather than lifestyle.
Suburbs across Melbourne are seeing a surge in downsizing as owners trade space for cash and lower mortgage stress.
Mr Morrell said downsizing had increasingly shifted from a retirement or lifestyle decision into a financial strategy, with homeowners looking for ways to free up money and reduce day-to-day pressure.
While the biggest equity gains are being made in Melbourne’s inner suburbs, the volume of downsizing activity is also building in growth areas including Wyndham and Whittlesea.
Harcourts Werribee director Petar Krnjeta says demand for cheaper homes has surged, with downsizers competing directly with first-home buyers.
Harcourts Werribee director Petar Krnjeta said that in Melbourne’s outer west, the trend was already reshaping the market and intensifying competition for cheaper homes.
“In the past six months alone, the market for two-bedroom units has taken off,” Mr Krnjeta said.
“We’re now seeing prices pushing $500,000, up from the low-to-mid $400,000s earlier this year.”
Mr Krnjeta said the fiercest pressure was at the more affordable end of the market, where downsizers and first-home buyers were increasingly chasing the same properties.
Competition is intensifying for properties under $600,000 as downsizers and first-home buyers fight for the same homes. Picture: NCA NewsWire / Aaron Francis
“Anything under $600,000 in Wyndham is dominated by first-home buyers, they make up about 80 per cent of that market,” he said.
“So downsizers are going head-to-head with them.”
Mr Krnjeta said rising costs were forcing homeowners to rethink how much space they could afford to keep.
“With the cost of living rising, people aren’t just downsizing their mortgages, they’re downsizing their lifestyles,” he said.
“It’s about reducing financial stress and making day-to-day living easier.”
He said the shift often involved sellers moving out of large family homes on bigger blocks and into smaller houses, units or apartments.
PIPA chair Cate Bakos says downsizing has shifted from a retirement move to a financial strategy for many homeowners.
PIPA chair Cate Bakos said downsizing was no longer just a retirement move, with more homeowners choosing to right-size earlier to manage rising costs.
“The biggest change is that it’s become a financial decision,” Ms Bakos said.
She said buyers moving into inner suburbs were not always saving money, with some spending more to access convenience and lifestyle.
But those heading to more affordable areas were often walking away with significant equity.
Experts say more Victorians are likely to trade backyard space for financial relief as demand for smaller homes grows. Picture: Jason Edwards
Ms Bakos said that money was increasingly being preserved for retirement or passed on to children trying to enter the property market.
“A lot of downsizers are choosing to position themselves closer to family, particularly children and grandchildren,” she said.
“But for others, it’s about finding something newer at a lower price point without sacrificing quality.”
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
‘Inevitable’: Grim housing crisis warning for Victorians
david.bonaddio@news.com.au
English (US) · 