REIV offers guidance on likely pocketed price difference when age pensioners downsize Melbourne homes

The introduction of a federal budget scheme to encourage seniors to downsize their home by quarantining profits from price differences might inspire many empty-nesters to finally make the shift. 

Those in Victoria might be helped by recently published information from the Real Estate Institute of Victoria which shows the most profitable places in Victoria to downsize.

The information shows retirees could unlock hundreds of thousands of dollars by downsizing even within their own neighbourhoods.

The REIV has published interactive maps which suggest how much money age pensioners could return to their bank accounts by moving to a smaller home in the same area.

Its a handy guide given the $112 million pilot to assist age pensioners to downsize their homes by providing a means test exemption of up to $200,000 for ten years.

The scheme only allows people to benefit if they have been in their existing home for 25 years or longer.


According to the REIV data, pensioners moving from a three-bedroom house in Brighton East into a nearby two-bedroom unit would unlock $453,750.

In Mornington, moving from a three-bedroom unit to a two-bedroom unit would unlock $232,500. In Beaumaris, moving from a four-bedroom house to a three-bedroom house would unlock $290,000.

The study found the suburbs with the greatest downsize potential were those in the inner to middle Melbourne suburbs such as Kew and Ivanhoe as well as those along the bay such as in Sandringham and Beaumaris. It found those suburbs have a high share of retirement-aged, lone-person households as well as relatively higher house prices.

By downsizing from a four-bedroom home to a three-bedroom home, residents would unlock, on average, $145,000. Beaumaris was the top in this category, followed by Parkdale, Northcote, Caulfield South and Williamstown.

Those downsizing from a three-bedroom house to a two-bedroom unit stand to unlock $220,000 on average. Top suburbs for this were Malvern East, Essendon, Williamstown, Ivanhoe and Brighton East.

Those downsizing from a three-bedroom unit to a two-bedroom unit stand to unlock $159,000 on average with the top suburbs being Malvern East, Mornington, Kew and Bentleigh.

REIV CEO Enzo Raimondo said that through downsizing retirees could increase their incomes and remain in the same area they had been living.

“Retirees can take advantage of the 25 or 30 years spent paying off their home loan by downsizing. This research will give them the tools to weigh up the options.

“By downsizing not only do they unlock the wealth generated over 25 or 30 years but they can also access a simpler lifestyle.”

He says downsizing isn’t for everyone, but those that do can access funds to help boost their retirement income.

Alistair Walsh

Alistair Walsh

Deutsche Welle online reporter

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