What are the motivating and discouraging factors?

In Australia, there is a need to understand more about downsizing among seniors. Specifically, this study sought to answer the following research questions:

What was the proportion of seniors who downsized over the past five years, and what were the main motivating factors? What was the proportion of senior Australians considering downsizing in the future? What types of dwellings were they considering downsizing to? How does this differ according to current living arrangement and dwelling size? What factors motivated and discouraged seniors from downsizing?

Research methods

The data in this report is taken from the National Seniors Social Survey (Wave 3). The survey was conducted from late September to late October 2013 by members of National Seniors<

Australia who were aged 50 and over. There were 2018 cases that were eligible for inclusion in the analysis. Data was weighted to be nationally representative of the Australian population aged 50 and over.

Key Findings

Over three-quarters of seniors (78%) lived in a separate house with three or more bedrooms.Sixty-one per cent of people living alone favoured living in a separate house or semi-detached residence with three or more bedrooms.

Ten per cent of seniors reported that they had moved to a smaller place of residence in the last five years, with over half (55%) moving to a separate house with three or more bedrooms. The two most common reasons why people moved to a smaller residence in the previous five years were physical (29%) or cost (27%) difficulties in maintaining the home or yard, and these were followed by lifestyle reasons (24%).

When asked about their current place of residence, 22% of seniors reported that it was too large in size, while 75% said that it was about the right size. Thirty per cent of seniors stated that they were considering moving to a smaller residence and 56% were not considering such a move. More couples living in four-bedroom dwellings or larger (46%) considered downsizing compared with people living alone in a dwelling with three or more bedrooms (25%). Forty per cent of people who were considering downsizing, as well as half of all couples living in a dwelling with four or more bedrooms, stated they would choose a dwelling with three or more bedrooms.

The people most likely to consider downsizing were those aged 50–64 years including couples living in separate houses with four or more bedrooms and those expecting a family member to move out in the next two years. Sex, location, self-rated health and time to or since retirement did not significantly predict peoples’ deliberations on downsizing.

When all those who stated that they were considering moving to a smaller residence were asked to report why they were thinking about moving, the most common reasons were not being physically able to maintain the home (59% reported this as a reason, 37% reported this as the main reason) and the cost of maintaining the home or yard (43% reported this as a reason, 17% reported this as the main reason).

The factor that discouraged the most people from downsizing was that it would take too much effort (44% stated this was a factor, 29% stated this was the main factor). The next most cited factor was the ability to find a smaller residence that is good value for money. The cost of stamp duty was reported as a discouraging factor by 33% of people, but only 6% stated that this was the main factor in discouraging them from downsizing. Concern regarding the proceeds of the sale of the home being subject to the Age Pension assets test was a discouraging factor for 20% of all seniors, and 30% of age pensioners.

Less than one-third (28%) of homeowners receiving the Age Pension stated that a proposed pilot scheme to encourage downsizing proposed by the Labor Government in 2013 would most likely or definitely influence their move to a smaller residence, while 57% said it was unlikely or would definitely not influence their move. One-half of people who were considering downsizing, but only a minority of people who were not considering downsizing, stated that this proposed scheme would influence their decision to downsize.

Conclusions

The findings from this study demonstrate that a large proportion of senior Australians have a preference to remain living in larger dwellings with three or more bedrooms. Only one-quarter of people living alone in houses of three or more bedrooms were considering downsizing. Those who were considering downsizing were most likely living in separate houses with four or more bedrooms.

The major motivating factors for downsizing were physical difficulties or affordability problems in maintaining their current home or yard. The main factors that discouraged downsizing were that it would take too much effort, financial barriers (such as the cost of stamp duty, other moving costs and concerns about the proceeds of the sale of their existing house being included in the Age Pension assets test) and the lack of appropriate housing.

Policy interventions to reduce financial barriers, such as the Pensioner Duty Concession Scheme in the Australian Capital Territory and the pilot scheme proposed by the Labor Government in 2013, may help encourage downsizing but, given the range of factors that influence people to downsize, these would be most effective if coordinated with other incentives such as housing that is suitable in terms of accessibility, size, affordability and location, and incentives to promote independent living.

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