Downsizing boomers may bust house market
Half of the baby boomers surveyed in a study on ageing plan to move or downsize as they get older, which the authors say has implications for a society in which there is already a shortage of houses.
The authors of the Massey University study, which surveyed 2000 people aged 63 to 78, say the trend needs to be factored into the government's housing policy and planning.
"This is a significant indication when you consider that baby boomers are one of the largest cohorts of our population and that we already have a housing shortage," said Professor Christine Stephens, who is co-leading the study with Professor Fiona Alpass, both from Massey's school of psychology.
Prof Stephens said the longitudinal study, funded by the Ministry of Business, Innovation and Employment, implied there could be a glut of larger houses and a need for more small homes.
Real estate agents say the trend is unlikely to lead to a glut of larger properties in Palmerston North, but it could put pressure on the middle market.
"The pressure is there's an undersupply, so they sell quite well," JVL Prestige Realty principal John van Lienen said. "Properties in Palmerston North that range in between $400,000 and $600,000 have been the beneficiaries of what we've been talking about."
As a result, he expected the prices would rise, especially for new and modernised executive homes, which were in particular demand "and above market, in my view".
Watsons principal Ken Watson said it was possible there would be pressure on the middle market.
"But it's not occurring at the moment. There are enough people in each age group, whether they are 30, 40, 50 , 60 or 70 to handle the housing market as it stands."
The trend for the older generation to downsize was not new, as he had seen it for most of his 30 years in real estate, he said. Neither real estate agent thought there would be a glut of larger homes.
Mr Van Lienen said although baby boomers would sell houses priced at $500,000 to $1 million, and buy something smaller, there would always be demand for larger properties.
"There's a new generation of people coming through doing well in their world, in the business world . . . they are the new generation buying the million-dollar properties."