![Location is all important to this generation of downsizers.](/content/dam/images/g/q/q/1/x/1/image.related.afrArticleLead.620x350.gt5p3i.png/1481174592469.jpg)
Empty nesters are leaping at soaring prices offered for their family homes but often crash-landing when they cannot find a replacement they can afford that matches their lifestyle.
Empty nesters without a nest is an increasingly common status for cashed-up Baby Boomers unable to compete in cut-throat inner suburban postcodes against other cashed-up boomers, investors and first-time buyers, say buyers' agents, developers and real estate agents.
Take as an example a purpose-built luxury complex of 24 spacious apartments in Kew, a prestigious suburb about 8 kilometres from Melbourne's central business district, that targeted empty nesters – it recently sold for a record $14,000 per square metre, which compares to about $9400 psm for Melbourne's high rise apartments and an average of $10,500.
Most apartments in another block of 37 luxury apartments in nearby South Yarra priced between $1 million and $4 million were recently sold to owner-occupier empty nesters, according to Paul Castran, chief executive of Castran Gilbert, a Melbourne estate agency and property developer.
Normally the sale of a new block is equally divided between buyers who are owner-occupiers and investors, says Castran.
"Only one sold to an investor. Empty nesters are looking for something that will give their new life a lift off, something that is beautiful, that meets their aspirations," he says. "Just give them a tingle and they will buy."
Growing demand from empty nesters was highlighted earlier this month when an vacant suburban block in Melbourne's blue-chip inner suburb of South Yarra sold for $2.75 million, or nearly twice its sale price from about 12 months ago. The buyers, who declined to be identified, plan to build a single-storey house on the prestige site that is close to shops, restaurants, sporting venues and hospitals.
According to the Property Council's Retirement Living Council, Australia's population of 3.2 million over-65s is expected to reach more than 8 million by 2050. By 2025, demand for retirement living accommodation is forecast to double and will not be met by existing or proposed facilities.
"A lot of the empty nesters have sold their family home or business, do not need to borrow, don't have to worry about interest rates, have plenty of superannuation and are looking for lifestyle," says Castran.
John Meagher, founder and managing director of 360 Property Group, the nation's largest privately-owned residential project marketing agency, says "space is the new luxury" for empty nesters.
"Empty nesters usually want fewer bedrooms, do not want to maintain a large garden or have to look after a swimming pool," Meagher says. "But they still want a place that has plenty of room where they can entertain children, grandchildren, extended family and friends."
The new nest needs high ceilings, a terrace or courtyard, generous living room space, big wardrobes, two bathrooms and three bedrooms – with at least one bedroom that can be converted into a study or integrated into the living space when more room is needed for entertaining, says Meagher.
Kitchens need to be large enough for a double-door fridge and pantry, he says. Another attraction is covered space for two cars with plenty of storage for golf clubs and other sporting equipment.
"This is a generation that is very particular about location," Meagher says. "They want something that is close to local shops and social amenities."
Real estate and buyers' agents in popular postcodes claim they are receiving multiple calls every week from downsizers who have sold their family home and are increasingly anxious about finding a replacement.
Jarrod McCabe, associate director of Wakelin Property Advisory, says many empty nesters' financial strengths, higher incomes and lower post-family lcosts make them "probably the most envied and even feared competition in the market place".
"But even they can be caught out by the fierce competition in the sector they wish to enter. They are competing against upgraders, investors and even some first home buyers.," he adds.
McCabe recommends they "make haste slowly" by planning carefully and anticipating setbacks.
"Don't jump before you have some idea where you will land. Don't start the process of selling the current home until you have done thorough research on the new property type: what you want, how much it is likely to cost and how long it might take to secure," he says.
"If you plan to move to a new area, you need to do your on-the-ground research. Attend inspections and auctions, introduce yourself to the leading real estate agents in the area (or developers if you are looking to buy off the plan) and, eventually, brief them on your needs and stay in contact."
Gilbert says some sellers are potentially losing millions because they are out of a rapidly inflating property market for more than 12 months trying to find a replacement home.
The alternative, buying first and then selling the family, creates the financial expense of holding two properties.
"A downsizer who decides to sell their current property first should consider a long settlement period, say a minimum of 90 or 120 days," says McCabe.
Costs of selling a house and buying another could total 10 per cent of the sale price, much more if bridging finance is needed while finding a new dwelling.
It means the seller of a $1 million house could lose nearly $100,000 in fees, costs and taxes before moving into another property with the same valuation, according to analysis by the Australian Financial Review. Those wanting bridging finance could pay $30,000 in interest fees on a three-month $1 million bridging loan.
Downsizer checklist*
- Why are you moving house? What features of your current home no longer meet your needs?
- Which characteristics of your current home and suburb would you like to "take with you"?
- What is your maximum purchase price?
- Do you require accommodation for visiting offspring/grandchildren? Do you have any special access or special accommodation requirements?
- In your current home, how much time would you typically spend on work-related tasks each week and where in the house are these conducted? Will you require a dedicated home office in your next home? Do you or other members of the household require dedicated spaces for specialised interests?
- How often do you cook for family and friends? Do you tend to entertain at home?
- Will you require a garage/carport? If so, for how many cars?
- Do you envisage your housing needs changing substantially in the five years after the proposed purchase?
- Have you considered areas you would and would not consider moving to?
- Which services and infrastructure (shops, transport, health) must your new home give you immediate access to?
- Are you prepared to undertake any improvements?
- When you have spare time, are you most likely to spend it at or away from home?
- How much time and effort are you prepared to spend on day-to-day maintenance of your home (excluding cleaning)?
- Which architectural styles do you find appealing?
- Will your new home have any of the following amenities and how often would you realistically use them? Tennis court/pool/BBQ area/terrace.
*Source: Wakelin