Why Boomers won’t budge: Calls for downsizer reforms to free up housing supply
A national real estate agency is calling for targeted incentives to encourage older homeowners to sell up and unlock supply for the next generation of buyers.
Buyer activity has picked up on the back of a third interest rate cut in August, with strong search and enquiry activity on realestate.com.au while auction clearance rates are sitting around their highest levels in two years.
Spring is traditionally the busiest time of the year for the property market, but national agency Raine & Horne says new listings remain subdued, with appraisals down 15% and listings 9% lower year-on-year.
Raine & Horne executive chairman, Angus Raine, says price rises will only accelerate unless policy reforms are considered to encourage more Aussies to sell their properties.
The head of national agency Raine & Horne, Angus Raine, is calling for reforms to encourage “last-home buyers” to sell. Picture: Getty
He says reforms such as a capital gains tax holiday for investment properties, and stamp duty relief for downsizers could free up more supply for younger families.
“Empty-nesters need compelling reasons to move—whether that’s freeing up equity to enjoy retirement, relocating closer to family, or downsizing to a low-maintenance home,” Mr Raine said.
“With the right incentives, these households can make their next move while helping the next generation of Australians get their foot on the ladder.”
Specific measures put forward by Mr Raine include a time-limited capital gains tax exemption for older investors who sell, such as two years.
Raine & Horne executive chairman Angus Raine. Picture: James Croucher
Another suggestion was stamp duty relief for ‘last-home buyers’ and empty nesters – perhaps of a certain age, e.g. over 70 – selling a principal place of residence and downsizing into a smaller, more suitable home.
“These measures would deliver a win-win, giving older Australians the financial confidence to sell while unlocking much-needed housing supply for first-time buyers and upgraders,” Mr Raine said.
The agency predicts national dwelling values to rise 5-7% this calendar year, before accelerating to 8-10% in 2026 as further RBA rate cuts and new first-home buyer initiatives take effect.
National property prices ticked up for an eighth consecutive month in August, to reach a record high of $827,000, according to PropTrack.
Stock levels subdued
While buyers are active, the supply of stock on remains down compared to last year.
Chief executive of Propertybuyer.com.au, Rich Harvey says the Sydney suburbs he works in remain very tightly held due to a number of imposts, including stamp duty.
The spring selling season has kicked off with strong competition at auctions across Sydney. Picture: Getty
He says there simply isn’t enough of the product or style of homes people want.
“There’s massive inertia and it’s there for a bunch of reasons. If you think of properties like a production line, it’s fully clogged,” Mr Harvey said.
“Older people want to move into low-medium density, simpler living, something a bit smaller with easier maintenance and there’s not a lot of those available.
“That’s the challenge – a lack of available properties to move to. Secondly, even more than stamp duty, many older people feel overwhelmed. They are happy [where they are] and just don’t see themselves moving.”
Buyer’s agent Rich Harvey.
Mr Harvey adds that having to pay stamp duty when selling is certainly an issue. He would like to see more incentives to help, such as the current superannuation rules for over 55s who sell to downsize.
In that scheme, up to $300,000 from the proceeds of a home sale can go into the seller’s super fund as a ‘downsizer contribution.’
Rate cuts turn up the heat
The Reserve Bank’s August rate cut down to 3.60% seems to have encouraged more people into the market at a time when fewer new homes are hitting the market.
Listings data from PropTrack shows new listings dropped 8% year-on-year in July, with new listings down in all capital cities relative to the prior year. New listings in Melbourne were down 9% and Sydney 5% lower.
It’s expected that potential further rate cuts will only elevate buyer activity, especially for the highly coveted suburban home.
The RBA has cut interest rates three times this year, with expectations of another cut in November. Picture: Getty
Partner at Beckett Property in Melbourne, Anthony Gallo says for his clients the most in demand property now is indeed the family home.
People are looking for the right school zone next to transport and amenities and it’s typically in the inner east, inner west and south-east of Melbourne, he says. If they have that, it’s tough to give up.
“Once your children are enrolled in a good school, you’re not going anywhere if you can help it,” Mr Gallo said. “So traditionally the family home is already a low turnover asset and it’s become more low turnover so far this year as well.
“I’m sure a stamp duty cut would help but it’s more so that buyers can’t replicate what they have, amid higher interest rates as well.”
