Downsizing in Retirement

As Australia's population ages, understanding the housing preferences of older cohorts becomes increasingly important for urban planners, policymakers, and developers. A significant behavioural trend within this demographic is downsizing—the shift from larger, detached homes to more compact and manageable forms of housing, such as townhouses or apartments.

The Australian Bureau of Statistics Census Longitudinal Dataset allows us to follow the trends within a sample of the population through time. In this instance, we can see how dwelling occupancy of the leading edge of the Baby Boomer (aged 65–74 years old in 2021) generation shifted between 2011 and 2021. The analysis gives insights into how living arrangements of the Baby Boomers change over time and what these trends suggest for the types of housing Australia needs to provide.

Downsizing is Occurring

Over 2011 to 2021, the vast majority of Australians aged 65–74 in 2021 remained living in detached houses, although the proportion declined in this period:

• In 2011, 84.2% of the cohort lived in a house.

• By 2021, this had dropped to 80.3%.

Over the same period, the share of older people living in townhouses increased from 7.0% to 10.3%, while the proportion in apartments rose modestly from 7.1% to 7.6%. This shift signals a gradual, though limited, change in preferences toward medium and higher-density housing as people age.

Housing Transitions by Original Dwelling Type (2011–2021)

These aggregate figures point to a general pattern of older Australians slowly transitioning into more manageable housing forms. However, when we examine individual transitions more closely—tracking where people moved from and to—we uncover a more nuanced view.

House occupiers

Of those aged 65–74 who were living in a house in 2011:

• 88.3% remained in a house by 2021.

• 6.4% had moved into a townhouse.

• 3.7% had moved into an apartment.

• 1.6% had shifted to other dwelling types (e.g., aged care, caravans, etc.).

This indicates that the overwhelming majority of older Australians in detached housing remain in that form of housing through retirement. However, the roughly 10% who transitioned to a more compact form of housing represent a sizeable number in absolute terms given the large population of this cohort.

Townhouse occupiers

Among townhouse dwellers in 2011:

• Only 46.7% were still in a townhouse in 2021.

• 38.4% had moved into a house.

• 13.7% had moved into an apartment.

This reveals a surprising reversal in the downsizing narrative: a significant portion of townhouse residents moved “up” into detached homes. This could reflect lifestyle or financial improvements (e.g., inheritance, wealth gains through superannuation or property sales), movement to more affordable regional areas, movement into the family house of their children, or availability of housing stock.

Apartment occupiers

Among apartment dwellers in 2011:

• 47.9% remained in an apartment in 2021.

• 29.7% had moved into a house.

• 21.5% had moved into a townhouse.

Similar to townhouse residents, a large share of apartment dwellers moved into lower-density housing. This again complicates the assumption that downsizing is always linear—from house to townhouse to apartment. As with townhouse ‘upsizers’, this could be due to lifestyle or financial preferences. For some, particularly those who initially retired into apartments, the move into detached housing may reflect a desire for more space, proximity to family, or dissatisfaction with vertical living.

So is Downsizing Happening?

The data present a mixed picture. While there is clear evidence that some older Australians are downsizing—particularly those starting in detached homes—many others remain in larger homes or even move to lower-density housing.

The net gain in townhouse occupancy and small growth in apartment occupancy suggest a slow but growing appetite for these dwelling types. The increase in townhouse occupancy from 7.0% to 10.3% reflects a meaningful market shift—particularly because townhouses often serve as an ideal compromise between space, cost, accessibility, and ease of maintenance.

Nevertheless, the overall stickiness of detached housing—with more than 80% of people aged 65–74 still in houses—reflects cultural, practical, and financial factors:

• Attachment to home: Older Australians often have long-standing emotional and community ties to their homes.

• Lack of suitable alternatives: A dearth of well-designed, single-level, affordable and accessible dwellings in desirable areas limits downsizing options.

• Financial incentives and disincentives: Selling the family home may result in higher aged pension asset tests or moving costs that discourage transition.

Implications for Housing Delivery and Policy

While downsizing among Australians aged 65–74 is not as widespread as often assumed, there is clear and growing interest in alternative housing types like townhouses and apartments. The transition is not always linear and is influenced by a complex interplay of lifestyle preferences, housing availability, financial factors, and community ties.

The data underscores that while most older Australians continue to live in detached housing, the minority that do transition represents a significant demand pool for well-located, well-designed, and appropriately priced homes. Indeed, while State Governments focus on high density apartments in activity centres, the growth in townhouse occupancy by the Baby Boomers underscores the need for more medium-density housing in areas close to services, transport, and community amenities. Townhouses represent the ‘sweet spot’ for downsizers compared to high-rise apartments, as they retain features like private gardens or street access while reducing maintenance and footprint.

Meeting this demand will require a rebalancing of housing supply priorities, greater flexibility in urban planning, and a sharper focus on the unique needs of an aging population.

To see how we can help you or your business, contact Angie Zigomanis at [email protected] or Rob Burgess at [email protected]