She was looking for a property with space for her dog Shelley, and the large, multi-storeyed family home no longer suited her needs. But downsizing to another house with less maintenance in the same city was looking expensive, even after Garrett sold her home for $530,000.

The Canberra median price is $625,000, according to research house Corelogic. So she opted to build her own cost-saving energy-efficient home in Albury — one of the seven cities in the "Evocities" regional living program — for a total of $350,000 and still have about $160,000 left for her retirement.

She is happy despite not being able to make use of the federal government's recently announced $300,000 superannuation bonus for downsizers.

In the May 9 budget, it was proposed that people aged 65 and over would from July 1, 2018, be able to inject up to $300,000 of the proceeds from the sale of the family home into super as a non-concessional (after-tax) contribution even if they already had $1.6 million in super.

Usually, as of July 1 this year, no after-tax contributions are allowed for those who have $1.6 million in either accumulation or pension phase. Draft legislation for the bonus non-concessional contribution has not yet been released. The home to be sold must have been owned for at least 10 years.

"It's a top up but not in my super," Garrett said. "To be honest, what can say, $3 million buy you today and have something left over? Not a lot, an apartment maybe but not everyone is an apartment dweller."

How downsizers benefit financially from getting rid of their large family homes with "spare change" left over comes down to the choice of homes they are downsizing to, says property agent The Agency's chief executive Matt Lahood.

"If they sell the family home but buy a smaller property in a more expensive area, then it's not necessarily a financial benefit," Mr Lahood said.

"But if they downsize and buy in the same or cheaper market, then yes."

"Where this varies is if the retiree instead elects to downsize in space and upkeep, and purchase a luxury apartment or townhouse in a more expensive postcode. Then there is potential to just break even."

LJ Hooker and Seniors Housing Online's recent white paper says "incentivising seniors to downsize to more appropriate accommodation would benefit wider housing affordability".

Close to 40 per cent of over-50s they surveyed are living in properties with two spare bedrooms. Almost one in five had three or more unused bedrooms.

But it appears even for those who make at least a $300,000 profit on the sales of their homes, the initiative may not work.

Financial planner Manifest Financial Wealth's Paul Zobonos says: "The government's main goal with this initiative is to encourage people who live in larger houses to downsize and thereby free up the stock of existing houses.

But one of the disadvantages of the scheme is that the downsizing super contributions will count towards the age pension asset and income tests, which means that downsizers will effectively be moving money out of an exempt asset and into a non-exempt asset.

"So I feel that the appeal of this initiative will probably be attractive only to persons who already have significant investments outside of their family home."

Zobonos cites the example of a homeowner couple with $130,000 in investments which are subject to deeming, and $20,000 in assessable personal assets. A $300,000 super contribution would increase their assessable assets to $450,000, thereby reducing their pension entitlements by $104.25 a fortnight each.

This story first appeared on The Australian Financial Review