Advocates have long warned that the housing crisis in Australia is being compounded by empty nesters who refuse to sell their mansions to make room for first homebuyers.
Baby Boomer and Generation X households are hoarding the most wealth in land values, holding an average equity of $1.36 million and $1.45 million in real estate respectively, according to KMPG figures released earlier this year.
But for many, the spiralling fees associated with downsizing outweigh the benefits.
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Have you decided not to downsize? Contact reporter April Glover at april.glover@nine.com.au
Multi-million-dollar home sales attract eyewatering stamp duty fees.
The state government tax on property purchases varies in each state and territory and is calculated on the market value of the property.
In Sydney, stamp duty on the median home price of $1.75 million is $78,262.
And in Melbourne, stamp duty on the median property price of $1.083 million is $62,326.
State government stamp duty fee waivers and reductions, which are different in each state and territory, only apply to first homebuyers, not long-time homeowners.
Combine that with cleaning and moving fees, along with conveyencer and agent fees and the upfront costs are staggering.
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Asset-rich baby boomers sitting on mortgage-free homes have been urged to sell their multi-bedroom properties as the housing crisis sends home prices skyrocketing.
Data even shows that one-third of the baby boomer generation feels as though their homes are too big for them.
Director of Metropole Property Strategists Michael Yardney told nine.com.au that the figures "simply don't add up" for home owners considering selling later in life.
"For downsizers, it means paying up to $100,000 in tax just to free up equity and move to a more suitable home," Yardney said.
"So it's no surprise then that many choose to stay put rather than incur a huge tax cost just to buy a smaller place."
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Writing on his blog, Yardney said homeowners are also reluctant to leave their neighbourhoods after decades spent there.
"When they look around for a smaller, well-appointed, accessible home nearby, they often come up empty," he said.
"The middle-ring suburbs of our major cities are woefully underdeveloped when it comes to medium-density housing.
"This is where boomers live, and where they'd like to stay, but development has been stifled for years by local councils and resistance to change."
Yardney said waiving or reducing stamp duty for Australians moving into their "final home" could unlock a new generation of properties.
The current stamp duty fees are only deincentivising retirees from freeing up family homes for the next generation, Yardney explained.
"It would materially lower the cost of downsizing and would unlock a large pool of mid-sized and large homes for the market, easing housing supply and providing retirees with more choice and financial flexibility," he added.
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