_Rightsizing, not downsizing

The strong demand from downsizers seeking easily maintainable prime properties close to city centre locations has been identified as one of nine global trends being monitored over the coming years, as identified in the Knight Frank Prime Global Forecast 2020. 

When working with our clients, many tell us their home is no longer required to provide the lifestyle they once had, and more often, the cost to upkeep outweighs the surplus space once desired.

With this new active retiree lifestyle, they seek simplicity, and to feel the vibe from living close to the action. Downsizing the living areas is not part of this movement —the yard most certainly—but their new home request is to be the right size for them, with amenities to match their lifestyle.

Large prime luxury apartments, with increased number of bedroom configurations is required to keep up with this growing demand. Having provision for potential lateral living, allows those seeking privacy and improved accessibility, to design their apartment to span the entire floorplate. 

Rightsizing also appeals to younger generations, and we see this at a much earlier stage than in previous years given the agile, transient and global nature of our work and play. Apartment living allows for low maintenance living when at home, convenience of concierge and the ability of lock-up-and-leave when away.

This prime trend follows a similar path to the wider market with the average new house size built in 2018/19 falling 1.3% on the year before, whilst the average new apartment size grew by 3.2%, according to the Australian Bureau of Statistics (ABS) when commissioned by CommSec.

Across the major cites of Australia, Greater Sydney, at 42%, recorded the highest portion of medium– and high-density dwellings at last Census in 2016, closely followed by the Gold Coast LGA with 41%, and Greater Melbourne comprising a 32% share. 

Less than a quarter of dwellings in Greater Brisbane and Greater Perth (23%) were apartments, townhouses, terraces, semi-detached, duplexes and villas with these cities skewed towards low-density housing with ample future land supply.

Those who hesitate downsizing from their luxury home often cite the cost of stamp duty as a major barrier. To encourage the dwelling migration, the Australian federal government introduced a downsizer incentive on 1 July 2018.

Those aged 65+ years can make a non-concessional (after-tax) contribution into their superannuation fund of up to $300,000 from the sale of their family home. The legislation states the property sold must be the person’s home (main residence and be eligible for the main residence exemption for capital gains tax) and held for at least the past 10 years. This will increase their tax-free fund limits. Couples will be able to contribute up to $300,000 each, giving a total contribution per couple of up to $600,000.

Image: The Horizon Collection, The Skytower, Brisbane

According to Jason March, Director of Prestige Residential Sales in Queensland, “the rightsizing trend is growing in Brisbane, with an increase in demand from buyers looking to downsize to a well-appointed luxury apartment. This demand is coming from not only retirees, who are more active than ever, but increasingly from families and entrepreneurs. In Brisbane we see many retirees looking to relocate from sizeable homes in the northern suburbs such as Ascot, Clayfield and Bridgeman Downs to luxury apartments in well-located suburbs closer to the CBD including Newstead, Teneriffe and the CBD. In the east retirees often migrate from Chandler and Balmoral to Bulimba, Kangaroo Point and Southbank, while western suburbs’ retirees from Chelmer, Pullenvale and Brookfield are more likely to be drawn to Toowong, West End and St Lucia."

Jason continues, “only recently has luxury apartment product been built in Brisbane to cater for this rightsizer population, including in the city’s Skytower. This development has recently released its ‘The Horizon Collection’, consisting of two and three-bedroom luxury residences and four penthouse apartments on the nine uppermost levels of the building, from floors 82 to 90. So far we have seen strong demand from buyers in this development looking to rightsize as it provides generously-sized luxury apartments, unrivalled views of Brisbane and beyond, and a high level of amenities including an infinity pool, private entertainment spaces and a fully fitted private gym. Residents can live in Brisbane’s CBD and are able to access everything the city has to offer while still having space, but without the maintenance of house in the suburbs.

The research found Brisbane city delivered the second highest portion of three-bedroom apartments since 2017, at 61%, and a further increase in the portion of total dwellings being built by the end of 2022 is forecast at 87%, which will be the largest share of any city.

Brisbane developers are one of the first across the major Australian cities to respond to the increase in demand for three-bedroom apartments from rightsizers, being one of the only cities in Australia analysed in the research to have a strong supply. The supply in most other cities is falling and Brisbane is likely to follow the national trend, especially as strong demand continues. Not only are locals looking to rightsize, but there is increased interest from Sydney and Melbourne buyers looking for not only the right product but who are attracted to the affordability proposition between the southern cities and Brisbane. Brisbane’s luxury apartment market provides great value, with southern buyers able to sell up in Melbourne or Sydney and buy something really special that suits all their requirements for rightsizing at a much more affordable price. That value proposition will likely change over time, so buying in the near term is key for rightsizers in Brisbane.”