Boomers facing shortage of buyers
Planning on selling a house to help fund your retirement? Think about who you will sell to.
A dwindling supply of young buyers is going to hurt prices for baby boomers in large swathes of the country just when they want to unleash cash for their golden years, a demographer says.
Selling in Auckland might be OK, said Professor Natalie Jackson, director of the National Institute of Demographic and Economic Analysis at Waikato University, because the sprawling city is expected to keep more than its fair share of young people. But Christchurch and most of small-town New Zealand face a shortage of people aged 25 to 64, Jackson told a retirement policy research symposium at Auckland University.
Jackson owns property in the South Waikato. "What was I thinking?"
She questioned who would buy the assets of people now in their late 40s, who would join the pension queue just when the shortage of wage-earners was at its worst in about 20 years.
"Growth is over in most of our non-urban regions so people wanting to quit assets like homes are going to find it more difficult, " she said.
"Population ageing is a truly inconvenient truth for many of us."
But Treasury's Grant Scobie questioned whether many people would need to sell their houses to fund their retirement.
Jackson said figures from Australia suggested about a third of people retiring sold houses, especially in their 80s, but Scobie doubted the figure was that high in New Zealand.
Most Kiwis retiring kept their homes until they died or downsized to smaller, newer houses of equal value, Scobie said.
Jackson said many people had other assets, but houses were often important as a source of "rainy day" income. She outlined some of the areas projected to be the most grey-haired parts of the country.
In the district of Matamata-Piako in the Waikato the ratio of over-65s to people aged 25 to 64 would be 6.4 in 10 by 2031 on recent projections, Jackson said. In Buller it could be as high as 7.6 in 10 over that period. Auckland aside, Hamilton and Queenstown had some of the biggest projected proportions of younger people.
The symposium discussed ways for New Zealanders to make their savings last through retirement. Experts mulled ways to make it easier for people to drip-feed themselves an income using products such as annuities and better reverse-equity mortgages on houses.
Compounding matters was that boomers had snaffled the highest median incomes for decades - leaving younger generations with less stored away to buy their assets, Jackson said.
Boomers like herself should now be pushing for younger people to earn higher incomes, she said.
Between 2011 and 2031, all population growth in 56 of New Zealand's 67 district council areas is projected to be in the 65+ age group.
All other age groups in those areas are forecast to shrink. In more than 20 of the 56 areas the population will decline overall.
In the remaining 11 council areas, the 65+ age group will have: 95 per cent of population growth in Christchurch and Whangarei. 60 to 63 per cent of growth in Waikato, Palmerston North and Waimakariri.
44 to 46 per cent in Wellington, Selwyn and Tauranga. 36 to 37 per cent in Auckland, Hamilton and Queenstown.
Source: Professor Natalie Jackson, director of the National Institute of Demographic and Economic Analysis at the University of Waikato
- Sunday Star Times