This $3.8m sale shows the pressures on downsizers
We speak to the team behind the most intriguing recent property sale.
The property: A six-bedroom house on 902 square metres at 4 Haining Avenue, Cottesloe, Western Australia. Sold by private treaty for $3.8 million.
The six-bedroom house on 902 square metres at 4 Haining Avenue in western suburban Perth’s Cottesloe sold by private treaty for $3.8 million.
Who was the agent/agency? Deb Brady, Ray White Cottesloe-Mosman Park.
How long was this on the market? Records show it was on sale for 172 days.
Why did this one sell? It’s in a fabulous street. It’s got a north-facing backyard and it’s very much in central Cottesloe. It’s walking distance to the beach, walking distance to the little Cottesloe shopping centre on Napoleon Street, walking distance to North Cottesloe Primary School, walking distance to the train and bike path that goes to the city.
Was it overpriced? No. I think it was good buying. On all accounts.
What did you think it would go for? I did think it would go for more. [Records show an asking price of $4.25 million in March, lowered to $3.95 million in June.]
What was surprising about it?
We’re seeing a real shift in people wanting to do two things when they sell: move into something smaller – a lock-up-and-leave – and they also want to take significant equity and put it into super.
The vendors wanted a six-month settlement after exchanging contracts in June to give themselves time to buy a smaller home in the same area at a time of very low stock.
We’ve got a real traffic jam. In the western suburbs, stock levels are very limited. There’s a bit of a jam between rightsizers – or downsizers, whichever term you prefer – getting their homes appraised and [the fact that there] are not enough homes for them to go into. They cannot find a small home to move into in the western suburbs and keep staying put.
How long are the settlements vendors are asking for?
Some are doing six months or longer. For Perth, it’s long. We exchanged contracts on this one in June. It went unconditional in August. And it only settles early next month.
People are looking and wanting longer time, so they’ve got time to buy something, and they are planning for their retirement. And super is part of it. People are saying with the costs increasing they’re going to need more money than they thought they did for retirement.
A few years ago, people rightsizing wanted to put a couple of hundred thousand dollars into super. Now they’re wanting to put a significant amount in. I’m talking about people putting five times more into their super than they were talking about in the marketplace a couple of years ago. It’s not unheard of for people to take $1 million out of their home and put it into super.
Why do they want to put more into super?
It’s a combination of wanting to enjoy retirement, make the most of it, living longer and the cost of living.
Taking more off the table: Over the past 12 to 18 months, downsizers have been wanting to put more equity from the sale of their homes into super, the agent said.
This sale did have a long settlement, it did give the vendors the opportunity to have a look around for their next home. This one was to rightsize and not so much about the cost of living.
When did you start seeing vendors focus on putting more into super?
In the last 12 to 18 months.
Are a lot of vendors feeling they need to put more aside?
It’s a conversation topic I come across quite a bit – about finding their next home and also setting themselves up.
What is the situation for prospective downsizers?
There’s no stock. It is that bleak. You’re getting reluctance to put their properties on the market. They don’t want to settle until they know where they’re going. When talking to buyers, we’re saying if we can get a long settlement that will be attractive to those sellers.
How are buyers responding?
If the property is in a prime spot, then buyers are generally happy to wait.
What downsizing options do owners have?
It’s hard for people to get homes exactly where they are wanting. A lot of them are having to go further beyond where they’re currently living. They’re having to make that circumference a bit wider in terms of their search. They’re moving to different types of product as well – looking at both houses and apartments.
Did your vendors find something close?
It’s just out of suburb but really close, so they’re happy.
Entry point: Buyers wanting to get into good areas are happy to give vendors the length of settlement they ask for.
Do you reckon we’ll see another result like this: a) next week b) next year c) next cycle d) never?
a) You’ll see one in the marketplace next week, for sure.
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