More incentives for downsizers if coalition wins election

With the election now just days away, the Coalition has refocussed its attention on encouraging more empty nesters including more members of Generation X to downsize, an announcement that has received the enthusiastic support of Angus Raine, Executive Chairman, Raine & Horne. 

At its campaign launch, the Coalition announced an expansion of the current ‘downsizer’ rules, allowing Australians aged over 55 to sell their homes and invest an extra $300,000 per person from the proceeds into their superannuation on a tax-free basis[i]. The scheme already exists for those aged over 65.

Angus says the extension of the downsizer superannuation scheme “now means that more Generation X empty nesters have an incentive to move, which is fantastic.” Generation X refers to the age demographic born between 1964 and 1980. 

Long-time advocate to get empty nesters moving

For over 15 years, as the head of one of Australia’s leading real estate brands, Angus has been calling on the Commonwealth and the states and territories to do more to encourage Australians to downsize as a way of addressing housing supply pressures. 

“For many older Australians, the family home has acted as a quasi-superannuation fund for the last six years, as retirement savings tied up in superannuation have been ravaged by the global financial crisis,” says Angus.

“However, the worm has turned for the economy; confidence is back, interest rates are still very low, and younger buyers are looking to take the next step up the property ladder, yet there is a shortage of suitable homes to meet this demand.”

Angus adds.

 The Coalition also announced a scheme to allow first home buyers to invest a “responsible portion” of their superannuation in a new or existing property to help them buy a first home. Under the scheme, first home buyers can invest up to 40% of their superannuation, up to $50,000. Currently, this is only available for voluntary contributions. 

At the same time, Angus praised the ALP for launching initiatives aimed at helping first home buyers to break into ownership and improving housing access for young families. “However, I would urge the ALP to take the issue of getting g downsizers moving seriously.

“A decision for empty nesters to downsize also provides a social dividend that should appeal to ALP policymakers. It will help address some housing shortages in many of our capital cities.”

Under Labor’s ‘Help to Buy’ policy[ii], the ALP will fund up to 40% of the price for a new home and up to 30% for an existing home for first home buyers. The scheme will be open to 10,000 Australians each year.

The states and territories need to do more heavy lifting

Although Angus welcomed the Federal housing policies developed by the Coalition and the ALP, the Raine & Horne Executive Chairman maintains that the state and territory governments should do more heavy lifting to improve housing affordability across Australia. 

“In some states first home buyers cannot access the First Homeowners’ Grant to buy an affordable established home,” Angus says.

Also stamp duty is a handbrake stopping many empty netters from downsizing across our states. “The costs of downsizing to a smaller property or a different location are too prohibitive thanks to excessive stamp duty charges imposed by state governments on their next property.

“Stamp duty eats into the retirement nest eggs of many older Australians, especially those who have very little superannuation savings.

While the Coalition is pledging to fix with the superannuation with an expansion of the current downsizer rules for making super contributions, the states and territories must review their stamp duty rules for older homeowners to support this initiative.”

[i] https://www.liberal.org.au/latest-news/2022/05/15/prime-minister-speech-liberal-election-campaign-launch

[ii] https://anthonyalbanese.com.au/media-centre/help-to-buy-chalmers-clare