Downsizing property adds pressure to property prices as families under financial stress would have to compete with younger investors or families for properties in the mid-price range. Downsizing can be attributed to family separations, lifestyle changes, job losses and the global financial crisis. Yet, the surging buyer demand is increasing property prices at the same time reducing household savings.
Retirees and empty-nesters often have minimal or no extra funds after selling their family property and downsizing. Also, investors are finding out that rental income and yields are not enough to justify purchase prices while families downsize to cut their debt. Releasing equity from larger homes to downsize does not work well very often.
A problem with downsizing is that it is tempting to get money by selling since property prices are going up. However, the property prices of the houses that you want to downsize to have also increased. She also said that this process will only work if new property will give then a change in both lifestyle and finances.
It has been estimated that Australian properties are overvalued by an average of 40 percent. This price pressure is bad for investors. Over the past decade, loss-making landlords have dramatically increased to 70 percent from 50 percent in 1998.
Property Investors in the market though can still make a considerable income on their investment properties through rental fees. Though most of those who downsize are people near retirement or empty-nesters, other households and families downsize to cut their debts. They can reduce their mortgage and free up more finances once they sell their bigger property to buy a smaller and cheaper one.
Tags: downsizing, Downsizing property adds pressure to property, investing in property, property, property investors
