Government needs to urgently facilitate access to housing for older people wanting to downsize

BY DAVID MARSHALL - Vice President, Grey Power NZ, Katikati Housing Network Member

The NZ housing crisis persists. Alan Maxwell highlights the need for downsizing-friendly units to free up family homes. He suggests deferred repayment bridging finance, citing Cork City Council’s Rightsizing Scheme as a model. The question remains: what solutions can the new Government bring?

We all know that there is a housing crisis in New Zealand, yet immigration continues at record levels exacerbating the crisis.

“Why?” This question was asked a lot at the recent annual Affordable Housing Development & Investment Summit, held in Auckland from 30 October to 2 November. Why does the market drive what homes are being built, not what is needed?

Alan Maxwell, a member of the Katikati Housing Network, was a keynote speaker at the hui and highlighted these challenges in the small town of Katikati, a small town of around 5500 in the kiwifruit and avocado belt in the Western Bay of Plenty. Around 40% of the population are aged over 65.

“I find it quite incredible that there are over 440 homes in Katikati occupied by a single retiree,” he said. “That’s over 20% of the total housing stock. Yet there just seems to be more family homes being built. What is needed is a lot more smaller units that these people can downsize to. This will free up hundreds of family homes that are already here.

“The impact on the elderly is quite significant. A survey was done at the end of 2021 of some retirees in Katikati. Of those surveyed, 70% expressed a desire to downsize and over 80% said financial stress had a major impact on their well-being. With no real solutions for them, many feel trapped in a cycle of financial hardship.

“Private investors and developers are looking for the highest return on investment, which doesn’t usually translate to affordable solutions for those on the ground. The symbiotic relationship between the big banks and private speculators/investors has driven sky-high bank profits and property values. New Zealand has the highest price-to-income ratio in the OECD for housing and one of the worst for cost/affordability for renters. The state housing register has increased by 500% since 2016 and will continue to rise if something isn’t changed at the central government level.”

For retirees who were urged to have a mortgage-free home prior to retirement, the reality can be quite challenging as they age, with escalating rates, higher insurance, and less ability to manage or finance the needed maintenance as the years pass.

A survey of over 2500 Grey Power members in June 2022, showed that over 40% wanted to downsize in their own communities within the next 5-10 years. Only 5% saw that this was feasible due to two main factors: no suitable housing being built in their community, and the inability to secure bridging finance to transition from a larger property to a smaller local property. Most banks refuse to even consider retirees, whose main source of income is NZS, when they apply for bridging finance because they are unable to afford the mortgage repayments within their income.

Free up older houses

What a simple solution to free up older larger houses within our community by providing bridging finance with all interest and capital repayments at the time of settlement, rather than during the transition period of 12-24 months. Surely a proactive government and/or an innovative bank could facilitate such an opportunity.

The benefits would be enormous with less productive land utilised for new housing, older larger houses freed up as affordable homes for young working families, and retirees able to live in security and without ongoing financial stress in homes that have outlived their usefulness to the occupants.

In his presentation Alan referred to the innovative model from Cork City Council, that focuses on providing their communities with a Rightsizing Scheme.

Alan said: “Rightsizing generally means moving home later in life into housing that is more suitable.  It was previously known as ‘downsizing’. Some people may want to rightsize if the home they are living in no longer meets their needs now, and into the future. Cork City Council is at the forefront in the delivery of rightsizing options for older persons, with the ongoing development of age-friendly housing schemes.

“The Council’s aim is to assist people wanting to transfer to a smaller home, better suited to their needs, and also to release properties that are in high demand by families that need them most.”

While such a scheme may not suit all retiree home-owners it is a significant step forward compared to what we face here in New Zealand. The challenge is there – what can our new Government deliver in this critical space?

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