Aging tipped to hit regional house prices
Monday 3 December 2012
A rapid rise in the number of retirees looking to sell their houses is likely to dampen property prices in most parts of the country except Auckland, a demographer says.
Professor Natalie Jackson of Waikato University told a Retirement Policy Research Centre (RPRC) conference in Auckland on Friday that the ratio of "decumulators" to "accumulators" is increasing around the country as the population ages.
She said about one-third of older people sold their homes upon retirement, meaning there would be a large increase in the number of house sellers as baby boomers reached retirement age.
But she said the departure of young people had led to a “hollowing out” of the age structure in the regions, leaving future house sellers in these areas with few buyers.
“If you sell in Auckland you’ll be right but everywhere else it’s going to be difficult. Right throughout the country decumulators are increasing relative to accumulators and it’s extreme in some cases,” she said.
Professor Jackson said the ratio of those aged 65 and over to those aged between 20 and 65 is currently 2:10 and will increase to 3.2:10 by 2031; “not a problem” for those looking to sell their houses.
However, areas outside the major centres will be hit much harder, she said.
For instance, Matamata-Piako is already at 3.5:10 and is projected to rise to 6.4:10 by 2031. The West Coast, currently 3.4:10, is likely to age even more quickly, reaching a ratio of 7.6:10 by then.
“One of the houses I own was in the South Waikato… what was I thinking?” Professor Jackson said.
Many parts of the country are already old: 36% of territorial authorities featuring 10% of New Zealand’s population already have more over-65s than children.
Professor Jackson said New Zealand’s aging is exacerbated by the exodus of young people across the Tasman, as well as the fact New Zealand had the largest and longest post-World War II baby boom of
She said Baby Boomers need to be split into two groups: the “leading edge” Boomers who are starting to hit 65, and the “lagging edge” Boomers who were born towards the end of the boom in 1965.
“Leading edge boomers will sell into a larger market than lagging edge boomers.”
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House prices may start to taper off in the coming years as supply finally starts to meet demand - but no one should be holding out for a huge price correction.
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