A six-figure payday can be unlocked by downsizing, a report shows. Picture: Supplied
With rising interest rates, higher living costs, and shifting lifestyle priorities, more Tasmanian homeowners are looking at what downsizing could do for them.
New analysis by Muval has revealed where people can profit the most from downsizing across Tasmania, with the largest savings found in the capital city.
The report found that downsizing in the Hobart municipality can save up to $291,000 when transitioning from a two-bedroom house to a single-bedroom home.
Moving from three to two bedrooms could save $216,000, while moving from four to three saved $74,000.
Hobart’s average saving was $194,000.
However, freeing up cash was not limited to the city; the next largest savings came from across the state.
The second-highest average savings were in Latrobe LGA, followed by Clarence, King Island and the Southern Midlands. These areas had average savings between $137,000 and $153,000.
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Hobart homeowners can unlock $291,000 when downsizing.
Muval chief executive James Morrell said downsizing is increasingly becoming a smart financial strategy, not just a lifestyle choice.
With property values rising, he said many homeowners are sitting on substantial equity. “Moving to a smaller home, even within the same suburb, could unlock significant cash,” he said.
“Regional areas such as Latrobe, King Island, and Circular Head excel in efficiency, freeing more than 50 per cent of a home’s value when moving from two to one bedroom.”
For those who live in an apartment, the biggest savings were found in Flinders, with an average of $182,000, followed by Kingborough, Sorell, the Northern Midlands, and Georgetown, with savings between $151,000 and $178,000.
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Mr Morrell said Tasmania stands out as one of Australia’s oldest states, with about 21 per cent of residents aged 65 and over and a median age of about 42, significantly higher than the national average.
“In Tasmania, homeowners tend to stay put longer compared with many mainland states,” he said.
“According to Muval’s 2025 Housing Index, the state’s migration patterns are relatively balanced, with roughly equal numbers of people moving in and out, and some regions, like parts of Greater Hobart, see more departures than arrivals.
“While downsizing can still unlock meaningful savings in areas like Hobart and Launceston, the data indicates that, compared with states with more active housing markets, Tasmanians take a slower, more measured approach to moving.”
Muvall CEO and co-founder James Morrell.
The cost of moving can be a barrier to downsizing — but it’s not the only obstacle.
While downsizing can unlock significant equity, Mr Morrell said the biggest barriers aren’t always straightforward.
“They’re often financial, practical and emotional,” he said.
“Cost is a major factor, with upfront expenses like stamp duty, agent fees and moving costs quickly eating into any potential gains, making the move feel less worthwhile.
“At the same time, it’s not easy to leave a long-term family home.
“There’s a strong emotional attachment, and the process of decluttering and moving can feel overwhelming.
“On top of that, a lack of suitable smaller homes in the same neighbourhood means many people are forced to compromise on space, lifestyle or location.”
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Daniel Gannon, executive director of the Retirement Living Council.
Retirement Living Council executive director Daniel Gannon said incentives were needed to encourage older Australians to “right-size” in order to ease pressure across housing, health and aged care, in turn freeing up housing stock for those looking to either enter the market or upsize.
As well as abolishing the outdated $258,000 retirement village purchase price threshold that locks 96 per cent of homes out of the government’s Commonwealth Rent Assistance program — a rule he describes as a relic of the housing market — he wants to see the age pension assets test threshold for single homeowners who ‘right-size’ lifted to $550,000, with a proportional increase for couples.
“This adjustment would encourage older Australians to move into safer, more suitable housing without being penalised for making sensible financial decisions,” he said.
“Together, these changes could unlock 60,000 homes nationwide, help older Australians escape housing stress, and free up homes for desperate young families.”
Many Australians choose to downsize within their current suburb or nearby, staying close to friends, schools, and local amenities while moving into smaller, more manageable homes.
However, Mr Morrell said the data shows there can be real financial rewards in looking further afield: selling a large inner-city property and moving to a more affordable suburb, coastal hub, or regional area can release a “significant chunk of equity”, sometimes up to 40 per cent of property value, without drastically compromising lifestyle.
Additional reporting by Tom Bowden
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