Retirees need credible alternatives to downsizing that respect their preferences

The national conversation around downsizing often overlooks the reality that most older Australians want to stay in their homes and many who do downsize often regret the decision.

Research consistently shows that older Australians overwhelmingly prefer to “age in place” – remaining in their own home or familiar neighborhood as they grow older.^[1]

This is supported by the Australian Institute of Health and Welfare, which notes that housing plays a critical role in the physical, psychological and emotional wellbeing of older people, with home ownership providing long‑term stability and security.^[2] Despite this, government policy and housing market dynamics continue to encourage retirees to downsize.

Homesafe Wealth Release CEO Dianne Shepherd said older Australians are repeatedly told that downsizing is the responsible choice, but for many, it is neither practical nor desirable.

“The family home is not just an asset - it is a source of identity, stability and connection,” Shepherd said. For a growing number of Australians, downsizing means losing far more than square metres.”

Even for those open to the idea, suitable housing options are limited. Smaller, appropriately designed homes for older Australians accounted for less than half of all new homes built between the 2016 and 2021 Censuses. The Downsizing Australia Report (REA Group & GemLife, 2025) found that 85% of older households (aged 55+) have two or more spare bedrooms, yet remain in their family homes because appropriate downsizer housing is not available^[3].

Financial barriers further complicate the decision. National Seniors Australia identifies stamp duty, agent fees and moving costs as major deterrents, with transaction costs often eroding much of the financial gain from selling.

“The idea that downsizing automatically improves financial security is not always the case,” Shepherd said. “Once you factor in stamp duty, agent fees, legal costs, moving expenses and the price of suitable smaller homes, many retirees end up worse off.”

Downsizing can also have unintended consequences for Age Pension eligibility. While the family home is exempt from the pension assets test, any surplus funds released from a sale become assessable. For example, if a couple frees up $300,000 by downsizing, their pension could be reduced by up to $900 per fortnight - or $23,400 per year – under current taper rates.

“This is a trap many retirees do not see coming,” Shepherd said. “The family home is protected under the assets test, but once you sell, that protection disappears.”

While the Federal Government’s Downsizer Superannuation Contribution scheme allows Australians aged 55 and over to contribute up to $300,000 per person from the sale of their home into superannuation, Shepherd said it does not address the core emotional, financial and practical barriers that prevent many retirees from moving.

As a result, more older Australians are seeking ways to access home equity without leaving their homes. Homesafe offers an alternative that enables older homeowners to unlock a portion of their property’s equity without taking on debt, compounding interest or the obligation to move, allowing them to remain in their home for life while improving financial flexibility.

“We are seeing more older Australians who want to help their children enter the property market but do not want to sell the family home,” Shepherd said “They need options that let them stay where they are, while still accessing the wealth tied up in their property.”

Shepherd said the broader national discussion needs to better reflect the preferences and realities facing older homeowners.

“Downsizing is not the universal solution,” she said. “Most older Australians want to stay where they are, many cannot afford to move, and the housing market often does not offer what they need. It is time for a more balanced conversation - one that supports alternatives and allows people to age in place with dignity, security and choice.”


[1] The downsizing preferences of and opportunities for Australians over 55