BRANZ is looking at the housing needs of New Zealand’s ageing population as it challenges previous preconceptions about what this sector needs and wants.
NEW ZEALAND is experiencing significant population growth as well as a changing age profile. The population is growing larger and older due to three factors – increasing life expectancy, declining birth rates and net migration loss of young adults, according to research at the University of Waikato.
Changing needs with growing, ageing population
Our total population will increase to 5,594,910 in 2033 from the 2018 total of 4,864,600 – an increase of 730,310 in 15 years.
Stats NZ projects (with 90% probability) there will be 1.32–1.42 million people aged 65 and over in 2068. This compares with the 2018 total of 744,300, a 1988 total of 357,870 and a 1961 total of 207,650. This is a rapid increase in this segment of the population (Figure 1).
More older people in the population raises issues for the housing market as they have needs for safety, comfort and connectivity to both community and support services that society must meet. The housing market will need to supply enough homes to meet this need.
More people renting
Traditionally, older people owned their own property when they retired and have a large capital investment intact. However, models of tenure are changing. Home ownership rates have fallen significantly since 1986.
While 24.8% of New Zealand households were rental properties in 1986, this changed to 36.3% by 2013. If this trend continues, it will mean that more people will be renting at all ages in the future.
BRANZ estimates that the number of people aged 65 and over in rental accommodation will increase from 154,680 in 2013 to 325,850 in 2038 (Figure 2).
Fewer people per house
Additionally, there is a trend to falling average house-hold sizes – partly as more older people live alone as one partner survives the other, sometimes for a significant period. A recent pattern of later family formation and fewer children contributes to this as well.
The average number of people per household is currently 2.6, but this is expected to fall to 2.5 in 2022, meaning the total number of homes required will need to increase.
The downsizing myth
One common notion is that the ageing population will lead to large-scale downsizing.
However, recent research has shown this is largely a misconception for two reasons. Firstly, the lack of suitable smaller dwellings means there is little on offer for people who want to live in smaller homes.
Secondly, the importance of staying in a community where they are known and comfortable is an important driver for people.
Home is a concept linked to place, and that includes a sense of belonging. For this reason, ageing in place, or staying in your familiar family home in the community you know, is increasingly understood as important. What does this mean for demand in terms of where and how people want to live?
Regional pressure varies
Many ageing New Zealanders live in the regions, and these will be affected differently by demographic and economic changes, with some seeing more growth in over 65s than others, both proportionally and in real terms.
Currently, a third of our 67 local bodies have 20% or more of their population aged 65 and over, with 41% of towns and 29% of rural centres having more than 20% of their population aged 65 and over.
Rates of home ownership will decline at variable rates across the regions. Areas such as Southland were forecast to see a 3.8% reduction in home ownership between 2006 and 2013 while other regions only a 0.2% decrease.
Challenge as workforce ages
Not only will there be increased demand overall, increased demand in some regions more than others and overall increased demand for rental properties, there will also be an impact on the construction workforce.
Stats NZ estimates the number of people aged 65 and over in the workforce (171,200) will increase to 411,500 by 2068. The current workforce is made up of 6% of workers 65 and over, and this is forecast to double to 12%.
The construction sector is likely to be more affected than some other areas because it often involves physical work, and older workers will struggle to stay involved.
Currently, 3% of workers in the construction industry are aged 65 and over. If the industry grows in line with general workforce projections, this will double to 6%, meaning there will be 10,600 people 65 and over still working in construction. This will impact on worksites as well as other areas.
Overall, there will be fewer people of working age to fill jobs and be part of the workforce building houses to meet increasing needs. This will be a challenge for industry.
What do we do?
Understanding the nature and scale of the problem is the first thing we need to do. Fortunately, there is a lot of useful work in this area being done in New Zealand in general and at BRANZ in particular.
Stats NZ’s projections of population, household composition and workforce are vital to our ability to plan. BRANZ has done some recent work in this area, including looking at building to rent (see BRANZ Study Report SR390) and analysing demand and supply for medium-density housing (see BRANZ Study Report SR379).
National Science Challenge NSC11 Building Better Homes, Towns and Cities is also researching projects such as Building Solutions for Changing Needs, which looks at designing new builds for accessibility for all ages and abilities. Two of its research areas focus on supporting success in regional settlements and future neighbourhoods in cities, providing useful and important guidance and advice.
BRANZ is also looking at building solutions that will simplify and speed up construction of new builds. Initiatives such as the Artisan quality assurance app, part of the Industry Transformation Agenda, has potential to speed up building processes.
By better understanding future housing needs, particularly for our ageing population, BRANZ can influence and support industry priorities for building.