O'Donnell Kerr Financial Planners
  • 31 March, 2016

Does size really matter?

While this is a common question – this article is not what you think!

One of the questions often faced by retirees, and those approaching retirement, is whether there is merit (or even necessity) in downsizing the family home and moving to something smaller. Perhaps it will be cheaper, and will thereby free up extra capital that can be invested and – hopefully – generate some extra retirement income.

Many readers will be aware of the proliferation of television shows that feature the ‘tiny house’ movement. Small is becoming the new big.

While the tiny house movement might be a suitable solution for some; I am not advocating that pre, and post, retirees should necessarily be looking to trade down to a house the size of a shipping container!

Perhaps two, or three, bedrooms and one living area might be more appropriate – rather than four bedrooms, a study, two living areas, and a media room.

But, it has to be said, the size of a person’s home comes down to a question of personal taste, purpose, and necessity. What’s appropriate for one person may be totally inappropriate for another.

When preparing to write this article I read a report by website Shrink that Footprint . The authors had researched the average size of new builds (for both houses and apartments).

Of the countries they researched – Australia had the largest house size coming in at 214 m2. Following Australia was the United States (201 m2), Canada (181 m2), and Denmark
(137 m2).

European and Asian house sizes tend to be much smaller, perhaps driven by the larger presence of apartments. In the United Kingdom the average house size is just 76 m2, followed by China (60 m2), and Russia (57 m2).

Of the countries included in the survey Hong Kong came in with the smallest house size of just 45 m2. Now that is about the size of a shipping container!

So, should you be thinking of downsizing as part of a retirement strategy (if you aren’t already)? There are arguments both for and against. Let me share a few of my thoughts:


  1. Selling the family home to trade down can be costly. It takes money to effectively market a property for sale. Costs include real estate agent’s commissions, associated marketing costs, legal fees, removal costs, and – something that is often overlooked – the costs of decorating your home to prepare it for sale. Depending on the state of your home a coat of paint, some repairs, and garden maintenance may be in order to make your home stand out from the crowd.
  2. Will the market support a price that is reasonable to allow you to buy a new home of the desired standard, but still leave sufficient money left over to invest? And remember – buying a replacement property will also involve other costs including government charges, legal expenses, and any money needed to make your new home yours.
  3. Over a lifetime we accumulate a lot of ‘stuff’. Often the things we have may not be used all that often (or ever?), but we often hold on to them just in case. We could write an entire blog of the therapeutic benefits of de-cluttering, but if you aren’t ready for it then downsizing your home is probably not for you.
  4. Downsizing may involve moving to a different neighbourhood. If you are attached to the area where you currently live – and love – can you find a suitable smaller home in the same area? If you do need to move to a new area you will need to do a lot of research to ensure that your new home delivers in terms of the family connections, community, and facilities you are looking for. If you do plan to move away from familiar territory consider renting for a short period in your new location before buying. Put simply –‘try before you buy’.
  5. If you are relying on the age pension you need to remember that the principal home is exempt from income and assets testing. By downsizing – additional funds may become available for investment that have a direct impact on the amount of age pension you are eligible to receive.


  1. A smaller home will, usually, be less costly to run. It will cost less for heating and cooling, less furniture will be required to fill it, and less electricity will be needed to light it. A smaller home will generally mean less carbon emissions – which can’t be a bad thing.
  2. Small is good when it comes to carrying out repairs and maintenance. Less paint; less carpet and other floor coverings; less window dressing, and a smaller yard means less time is needed to be spent maintaining it. Unless you are a keen gardener – having a smaller yard may allow you extra time to pursue your other interests during retirement.
  3. Downsizing forces us to declutter. Excess furniture, clothing, household appliances, and additional trappings can be sold or given to charity; thereby giving them, and you, a fresh lease of life.
  4. Most importantly – downsizing may generate some much needed cash that can be contributed to super (depending on your age), or be invested to create an additional source of income during retirement.

Downsizing is not a decision to be taken lightly; but, if correctly implemented – it can be a very liberating experience.


The Realise Your Dream blogs are written by Peter Kelly and Mark Teale. More information about the authors can be found here

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