The Real Costs of Downsizing: What Most Retirees Don't Budget For
Most people focus on the sale price and purchase price when thinking about downsizing. The gap between the two feels like money freed up. In reality, transaction costs eat 10 to 20 percent of that equity. Here is what actually costs money when you sell one home and buy another.
Selling Costs
Real estate agent commission
Typically 2-3% of the sale price. On a $1.2M sale, that is $24,000 to $36,000. Some agents charge a flat fee, but most work on percentage. Includes their marketing coordination but not the advertising spend itself.
Marketing and advertising
$5,000 to $15,000 depending on the market and campaign scope. Covers online listings (realestate.com.au, Domain), professional photography, floor plans, and possibly print advertising. In competitive markets, vendors often spend at the higher end to stand out.
Conveyancing (selling side)
$1,000 to $2,000 for a solicitor or conveyancer to handle contracts, title transfers, and settlement. This is the legal paperwork for the sale.
Pre-sale repairs and styling
$2,000 to $5,000 for paint touch-ups, garden tidying, and minor repairs. Professional staging adds another $3,000 to $6,000. Many agents recommend staging for the first few weeks on market, then removing it.
Buying Costs
Stamp duty
The single largest buying cost. On an $800,000 property, stamp duty ranges from around $21,000 in Queensland to over $44,000 in Victoria. Senior concessions can eliminate this entirely in some states. See the full breakdown below.
Conveyancing (buying side)
$1,500 to $2,500. Slightly more than the selling side because it includes title searches, council and water rate checks, and reviewing the contract of sale.
Building and pest inspection
$500 to $700 for a combined report. Non-negotiable for any property purchase. Identifies structural issues, termite damage, or major maintenance needs before you commit.
Moving costs
$2,000 to $5,000 depending on distance and volume. Interstate moves cost significantly more. Budget extra for temporary storage if settlement dates don't align.
Strata report (if buying an apartment)
$200 to $350. Shows the financial health of the owners corporation, any upcoming special levies, building defects, and insurance status. Essential for apartment purchases.
Stamp Duty by State
Stamp duty on an $800,000 property varies by more than $20,000 between states. Senior concessions can reduce or eliminate the cost entirely in Victoria, ACT, and South Australia.
| State | Duty on $800K | Senior Concession | Eligibility | Cap |
|---|---|---|---|---|
| NSW | ~$31,000 | None | - | - |
| VIC | ~$44,000 | Full exemption | Pension/CSHC/HCC/DVA card | Up to $600,000 |
| QLD | ~$21,000 | None | - | - |
| SA | ~$34,000 | Full exemption (NEW) | Age 60+, selling home, buying new build | New builds under $2M |
| WA | ~$31,000 | Off-the-plan only | General (not senior-specific) | Up to $800,000 |
| TAS | ~$28,000 | Expired June 2025 | - | - |
| ACT | ~$24,000 | Full exemption | Age Pension, DSP (50+), DVA Gold | Up to $1,020,000 |
| NT | ~$24,000 | Over 60 or Concessions Scheme | Varies | Varies |
Stamp duty amounts are approximate, calculated on an $800,000 established property purchase. Actual duty depends on property value, type, and whether you qualify for any concessions. Source: state revenue offices.
Ongoing Cost Changes
Downsizing changes your regular outgoings. Some go down, some go up, and some appear for the first time.
| Cost | House | Apartment/Townhouse |
|---|---|---|
| Body corporate / strata | $0 | $2,000 - $8,000/yr |
| Council rates | $1,500 - $3,500/yr | $1,000 - $2,500/yr |
| Home insurance | $2,000 - $4,000/yr | $300 - $800/yr (contents only) |
| Maintenance | $3,000 - $8,000/yr | Minimal (covered by strata) |
| Utilities | $3,000 - $5,000/yr | $2,000 - $3,500/yr |
The net effect varies. A large house with a pool and garden can cost $15,000 or more per year to maintain. A modern apartment might cost $8,000 in strata but nothing in maintenance. For older apartment blocks, watch out for special levies, which can run to $10,000 or more for major building works like waterproofing or lift replacement.
The Break-Even Question
When do the savings from lower ongoing costs offset the upfront transaction costs?
Consider a typical scenario. You sell a $1.2M house and buy an $800K apartment. Transaction costs total around $80,000 (agent fees, stamp duty, conveyancing, moving, repairs). Your ongoing costs drop by about $5,000 per year (lower rates, insurance, and maintenance, partly offset by strata fees).
At $5,000 per year in savings, it takes 16 years to break even on transaction costs alone. Factor in the pension reduction from having an extra $400,000 in assessable assets (the equity you freed up), and the payback period stretches further.
This does not mean downsizing is a bad decision. Many people downsize for lifestyle reasons, to release capital for retirement spending, or to reduce the physical burden of maintaining a large property. But it does mean the financial case is more nuanced than "sell high, buy low, pocket the difference." Modelling your specific numbers is the only way to see the full picture.
Calculate your full picture
Our downsizing calculator models stamp duty, agent fees, pension impact, and the downsizer super contribution for your specific numbers.
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Modelled outcomes only. Not financial advice. Costs are indicative and vary by location, property type, and provider.