Baby Boomers Retire 2010-2015: Selldown & Market Crash or High Immigration & Boom !!

[Bluekiwi]

Baby Boomers Retire / Pass Away


Sales of Inheritated Estates or Retired baby boomers downsize selling up and moving to cheaper areas living off the proceeds from the sale of their house.
Less people needing to live and work in Auckland so demand falls and so do prices ?

Or is at a matter of Immigration ?

When the Baby Boomers start retiring 2010 approximately, as the population ages, and I have heard at the rate of 100,000 per year.
It is believed ny many experts that the demand for property will still be strong as these people will likely still wish to stay in their homes.

But is it true that New Zealand will need immigration of 100,000 per year to match the Baby Boomers who are retiring, for the workforce and fill vacancies to keep the New Zealand economy going ?

As the current policy expectations are for between 5,000 and 15,000 PA.
Is there some grand plan to increase Immigration when the Baby Boomers start retiring, we already have a labour shortage now that is holding back economic growth.

Which stream of thought does everyone subscribe to ??????

[Green Fish]

I don't know whether you can apply standard 'supply and demand' economics to the property market. In my opinion, the rental market is more accurate in that regard. If that's true, there was no significant increase in demand during the boom. So why the boom? 'South Seas' speculation and too much credit.

[Bluekiwi]

I don't know whether you can apply standard 'supply and demand' economics to the property market. In my opinion, the rental market is more accurate in that regard. If that's true, there was no significant increase in demand during the boom. So why the boom? 'South Seas' speculation and too much credit.

Immigration was high and basically caused the boom (as per the figures and economists reasoning), as construction which lags was too slow.

The current scenario has low Immigration (+ Interest rates obviously) which is drving prices down also.

So population growth obviously drives prices, why Auckland is so expensive.

[Green Fish]

But shouldn't that be reflected in the rents? Manhatten, Hong Kong, and Central London are very expensive to buy too, but so are the rents. Auckland is expensive to buy, but relatively cheap to rent.

[Bluekiwi]

Question is, what impact will the Bayboomers retiring at 30,000 to 80,000 per year have on house prices ?

And will Immigration come to the party to save us and the other western countries with the same problem ?

Mekbourne's Immigration policy seems to be doing the job ?

[Green Fish]

I don't think the retirement of the baby boomers will have much impact, because I would expect that most will owe very little, if any, on their mortgage, so they will not be forced to sell.

The South African situation is probably the major immigration issue. It can be presumed that more and more South Africans will want to emigrate to Australia and NZ, which will certainly push up rents, and that might flow on into prices.

[67910241]

Green Fish

I don't think the retirement of the baby boomers will have much impact, because I would expect that most will owe very little, if any, on their mortgage, so they will not be forced to sell.

The South African situation is probably the major immigration issue. It can be presumed that more and more South Africans will want to emigrate to Australia and NZ, which will certainly push up rents, and that might flow on into prices.

How many more people "qualified" (by the means of sufficient wealth and professional/educational profile and history) or "desiring to emigrate" (by the means of really fearing crime and unstable political situation) are really there in SAR. Because, you need to match the two to qualify someone as a prospective immigrant.

I'd say 2M, tops.

And many of them will want to move to Europe, the States and Canada too. I am aware of a very large SA community in Broward County, FL, and they're still growing. To the best of my knowledge, it is bigger than their metro Auckland community. And there are many others. So, they have plenty of other choice.

By the time you get to NZ, we could be talking another 25,000, maybe, just maybe 50,000-100,000 in all, till at least 2020. And this supply will get exhausted due to some rather "obvious reasons". And we're talking hypothetical, ie. if they ALL decide to leave.

GS

[Green Fish]

saffers

My assumption would be that most saffers (as we call them) would go for Sydney or Queensland, with NZ as 'second-best'. Didn't realise that they were keen on Florida, but I assumed that there would be some sort of "informal" restriction in the USA.

In any event, every immigrant saffer to NZ that I have met has been a great addition to the country. They were born to live here. (The Aussies, of course, will claim that they were born to live there - and they're probably right.)

[Austrokiwi]

Baby boomers

I have seen arguments in both directions on the effect of retiring baby boomer's on house prices. One argument is that Baby boomer's' will sell the family home and move into a smaller place creating a glut of larger homes.
Just in regards to that argument:

I have been involved in pre-retirement seminars for international civil servants. Many retirees I have spoken to in preparing these seminars have commented that before retirement they thought a smaller house was what they required when they retired, but in reality they found a larger house/apartment was what they really needed.
The reason being is for couples in retirement individual privacy becomes an issue so each person needs a room/office for their own use. Some even went so far as to get two telephone lines ( at least two numbers) and two telephones.
As one retired colleague put it I married her for better or worse but not lunch every day.

As for moving: I have seen some retirees find this a huge mistake, as they have spent years in one locality and all their social supports(clubs friends etc) are in that locality. Moving away to a dream retirement location can become a horror of loneliness, as all the previous support systems are gone and have to be rebuilt.

I really have no strong view on what will happen apart from knowing there will be some surprises for the economy when the baby boomers retire.

[leapy]

I'm not convinced they will retire in any sort of orderly fashion. Most of my boomer/builder colleagues appear to want to keep working and are doing so well past traditional retirement age.

[Green Fish]

Austrokiwi: A very good point re house size. It is very difficult to have a house that is too big. Where there's a room, there's always something to put into it.

Assume that a baby-boomer couple retires in 2015, with a 4 bedroom house. If they are lucky enough to have grandchildren, then there is an obvious use for the space. But even if they have no grandchildren, the room is easily utilised.

[Errol]

The first of the "Baby Boomers" of which I am one, reach retirement age in 2011, I prefer to call that date "when I finish fulltime work" however I intend to work well into my seventies in one way or other. I have toyed with various plans ,one of them being selling our modern home and buying a "do up project" this has gone down like a lead balloon with my dear wife! another is to sell one or two rentals and do the same thing. We downsized our section and upsized the house when we bought our existing home a few years ago, and green fish is right, the grandchildren fill it up nicely and with more on the way my wife and I are thankfull for the extra room (and bathroom) The convieniance of a larger warmer home that the Grandchildren can share is a factor that many in our position will seriously consider as they reach retirement age. Someone once said that NZ will be a land of half empty 3 bedroom homes with babyboomers rattling around inside them, this I feel is far from the truth of the future of housing in NZ.

[Green Fish]

Good points Errol: To be completely frank, there's nothing good about getting old, except for the grandchildren.

So hang on to the big house.

[Austrokiwi]

I suspect this idea of buying down in retirement is a hold over concept from a generation ago. I do not think too many people have caught up with the fact that Baby boomers are not going to be dictated to by the expectations of others. I really think the sell down idea is a myth. All the recent IP activities has been significantly influenced by people purchasing to provide retirement income ( they are not going to sell up unless in distress). Now although baby boomers start retiring soon Most have another 15-20 years of life expectancy( at the least) remaining.

[67910241]

What about the large-sized property downsides?

I strongly believe that there are several good reasons why not to reside in a large property when one's in one's 70s and above.

To name a few:

1. (commonly) large grounds:
1a. requiring more extensive ground maintenance and/or
1b. possibly incurring higher rates expense
2. (commonly) large surface areas
2a. requiring long cleaning sessions
2b. requiring more expensive regular maintenance than a smaller alternative of similar quality
2c. often increasing the total heating/cooling bill
3. More valuable property overall:
3a. commonly incurring higher rates expense
(this one's a biggie
3b. incurring a substantially higher opportunity cost of locked up capital that could have otherwise been providing passive income, which comes pretty handy when one's no longer on a salary