The financial and practical challenges associated with moving home are preventing many older Australians from downsizing, despite a significant proportion living in properties with more bedrooms than they need. New research suggests that transaction costs, particularly stamp duty, are contributing to a reluctance to move into smaller and potentially more manageable homes.
The 2026 Downsizing Australia report, prepared by realestate.com.au and GemLife, identifies stamp duty as one of the major financial barriers facing homeowners considering a move. Depending on the location and purchase price of a replacement property, the tax can add tens of thousands of dollars to the overall cost of relocating.
For households approaching retirement or already living on a fixed income, these additional expenses can make downsizing financially unattractive. Even when selling a larger family home would release substantial equity, the costs associated with purchasing another property can reduce the financial benefits.
The report found that one-quarter of surveyed respondents identified stamp duty as a factor preventing them from downsizing. This highlights the influence of government transaction charges on housing decisions, particularly among older homeowners who may have limited interest in taking on additional financial commitments.
However, financial considerations are not the only obstacle. Almost one-third of respondents identified the inconvenience and disruption of moving as their biggest concern, making it an even more significant deterrent than stamp duty.
For many older Australians, the family home represents decades of personal history, established routines and community connections. Moving involves more than changing addresses, particularly for households that have accumulated possessions and developed strong attachments to their neighbourhoods.
The practical demands of preparing a property for sale, organising inspections, sorting belongings and arranging a move can also feel overwhelming. These considerations may encourage homeowners to remain in properties that no longer suit their lifestyle or maintenance requirements.
GemLife managing director Adrian Puljich says millions of older Australians continue to occupy large homes containing unused bedrooms. Despite having the potential to move into smaller properties, many are discouraged by the financial and practical costs involved.
The research demonstrates the scale of underutilised housing among older households. According to the report, 88% of households aged 55 and over have at least one spare bedroom, while 60% have two or more spare bedrooms.
These figures raise important questions about how efficiently Australia’s existing housing stock is being used, particularly during a period of persistent housing shortages and affordability pressures.
Large family homes occupied by one or two people may provide more space than their residents require, while younger households with children can struggle to find suitable properties within established communities.
Encouraging voluntary downsizing could help improve the distribution of available housing without relying exclusively on new residential construction. When older homeowners move into smaller properties, larger homes may become available to growing families seeking additional bedrooms and outdoor space.
Realestate.com.au senior economist Anne Flaherty says supporting older households to downsize would contribute to more efficient use of Australia’s housing supply.
However, creating the right conditions for downsizing requires more than reducing transaction costs. Older Australians also need access to appropriate replacement housing that meets their changing lifestyle requirements.
Single-level homes, accessible floor plans, low-maintenance gardens and proximity to healthcare services can become increasingly important considerations. Properties located close to shopping facilities, public transport and established social networks may also appeal to downsizers.
In some established suburbs, the limited availability of suitable smaller homes can make moving difficult. Homeowners may discover that local apartments, townhouses or retirement living options do not provide the space, privacy or accessibility they want.
There can also be a substantial difference between the selling price of an existing home and the cost of purchasing a high-quality replacement property. In desirable locations, modern apartments and low-maintenance homes may command premium prices, reducing the amount of equity released through downsizing.
Stamp duty adds another layer to these calculations. Even when the replacement property costs less than the family home, the tax can represent a considerable expense alongside legal fees, selling costs and removal services.
For policymakers, the findings suggest that housing affordability discussions should consider how existing properties are distributed among households, as well as the number of new dwellings being constructed.
Potential measures to encourage downsizing could include reviewing transaction costs, improving access to suitable housing and supporting the development of diverse accommodation options in established neighbourhoods.
Nevertheless, downsizing remains a personal decision. Some homeowners may prefer to retain additional bedrooms for visiting family members, hobbies or future care arrangements, regardless of potential financial incentives.
The 2026 Downsizing Australia report illustrates how financial barriers and the inconvenience of moving can influence housing choices. With 88% of older households having at least one spare bedroom, improving the attractiveness of downsizing could become an important part of Australia’s broader housing supply conversation.
