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New Strategies For A Changing Population

Joanna Jefferies examines the changing New Zealand population and finds investors need to think strategically to accommodate their future tenants.

By: Joanna Jefferies

1 May 2016

New Zealand's Population is ageing rapidly and the current housing stock is ill-equipped to deal with the specific needs of this group. Statistics NZ's projections indicate our population (4.68 million in April, 2016) is likely to increase to around five million in 2025 and the group of those in the 65+ age bracket (currently 14% of the population) is likely to grow to between 24-32% of the population by 2068.

Not only is our population ageing rapidly, but big changes are apparent in the ethnic make-up of the population, with Maori, Asian, and Pacific populations growing faster than New Zealand's population overall.

The number of people identifying with Asian ethnicities is likely to exceed the number identifying with the Maori ethnicity from the mid-2020s and all ethnic populations will age, with increasing numbers and proportions of their populations in older age brackets.

The dramatic changes to New Zealand’s population means landlords need to prepare themselves to accommodate these groups, and to understand the specific needs of their future tenants.

“It’s ‘business 101’ really – any business needs to think about the consumer and the end user of the product and design a product which meets their needs,” NZPIF executive officer Andrew King says.


With almost a third of our population moving into the 65+ age bracket over the next 20 years, it’s crucial to understand the type of accommodation and the accessibility requirements of this group.

“It’s thinking about the type of properties an ageing person is going to want – they are going to be small, one or two bedrooms – rather than large houses. They are going to be easy to clean and maintain, ideally single level, so no stairs or steps,” King says.

We have an opportunity to get a better calibre of tenant because they have a genuine need and they are likely to stay there long term - Nigel Smith

Lifemark general manager Geoff Penrose says it’s important not to lump everyone in the older bracket into one group of tenant, with a singular set of needs.

“I think what we will find out is there isn’t just one group anymore,” Penrose says. “We are probably going to segment our markets a bit more as we learn about ageing population and needs. I think we will find particularly that last group – aged over 85 – their needs are going to be slightly different.”

Large numbers are moving into the 85+ age group – increasing from 78,000 in 2014 to a projected 270,000 in 2041.

Penrose says homes that are safe, easier to live in and that accommodate for higher levels of assistance are what the older population needs.

“If you need to have someone that comes in and assists you with showering, you need to have a shower that someone can get into. You need to have a wider shower, a bigger shower – possibly a level-entry shower,” he says. “Can an ambulance stretcher get down narrow corridors? Can it turn into a room?

“If you want someone to stay in their home longer, then you need to have those sorts of provisions in place.”

King says many retirees will own their own home and those renting will likely fall into the lower socio-economic bracket.

“If [investors] think this is a good market to target, then they should be thinking about it when they are buying their investment properties - do it with that in mind. Either try to buy that type of property or a property that they can turn into that type of property.”

High Calibre Tenants

According to Statistics NZ’s Disability Survey 2013, 24% of the New Zealand population identified as disabled – a total of 1.1 million people – and this number is likely to increase as the population ages. A staggering 59% of people aged over the age of 65 were disabled, with physical impairment the most common type of impairment (64%). 90% of disabled adults had limited mobility.

It makes sense then, to cater to the needs of this group, says Accessible Properties housing development manager Nigel Smith. Accessible Properties is a social housing provider, working largely in partnership with the Government. Smith says they have built 180 houses in the last few years – typically one to two bedroom units at a four or five star Lifemark rating. (A Lifemark rating measures how well a home can accommodate occupants at all stages and needs through life – with a five star accreditation being the highest level). These properties include accessibility features such as level access detail in entryway and showers, wide hallways and doorways and an allowance for a 1500cm turning circle for wheelchairs.

“Because they are smaller it does cost us a bit of space, but with the builders who we use regularly it doesn’t cost us any more,” Smith says. “We have an opportunity to get a better calibre of tenant because they have a genuine need and they are likely to stay there long term.”

Diverse Housing Needs

New Zealand’s population is currently growing at a faster rate than Australia’s, reflecting significant gains from net migration. But with a housing crisis currently occurring in Auckland there are concerns the market cannot keep up with the housing needs of a rapidly growing and ethnically diverse population.

The Asian population (0.54 million in 2013) is projected to increase to 0.81–0.92 million in 2025 and to 1.06–1.26 million in 2038. The Pacific population (0.34 million in 2013) will likely increase to 0.44–0.48 million in 2025 and to 0.54–0.65 million in 2038.

In November 1 last year the Minister of Immigration Michael Woodhouse announced a number of measures put in place to encourage immigrants into the regions outside of Auckland.

These measures include:

  • Tripling the bonus points for skilled migrants applying for residence with a job offer outside Auckland from 10 to 30 points.
  • Doubling the points for entrepreneurs planning to set up businesses in the regions under the Entrepreneur Work Visa from 20 to 40 points.
  • Streamlining the labour market test to provide employers with more certainty, earlier in the visa application process.

Woodhouse said: “These changes will contribute to a better balance in our immigration settings and will allow regions to access more of the people, skills and investment they need to build the local growth needed to support jobs and higher incomes.”

Any business needs to think about the consumer and the end user of the product and design a product which meets their needs - Andrew King

King says immigrants’ housing needs can be diverse, with many living in extended family arrangements.

“You can do things like put minor dwellings on properties and you can rent them to families, so that they have room to spread out, but they are still living in a community on the same property.”

The number of extended families increased by just over half from 2001-2013. In 2013, there were 100,605 extended families, up from 82,692 in 2006, and 64,929 in 2001. Extended families were most likely to be three or more generations.

“If investors can find ways of housing [extended families] in better conditions, but don’t increase the cost of the rent too much, then that’s going to be really popular with that group.”

High Density, Low Maintenance

The 2013 Census QuickStats about Families and Households shows the typical ‘nuclear’ family of the past has changed greatly. New Zealand's most common type of family in 2013 was a couple with children (41.3%). The proportion decreased between 2001 and 2013, however. The trend has been decreasing since 1991, when these families made up 48% of all families in New Zealand. One parent families with children had 17.8% in 2013, with the highest percentage of one-parent families in the Gisborne region, at 27.8%.

'Couple without children' was the second most common family type at 40.9%. The proportion of this family type has increased greatly since 1991, when these families made up 34.8% of all families in New Zealand. However, new projections into the future show family type will stay mostly static.

Hobsonville Point Land Company commercial manager Mark Fraser says the company is seeing a lot more families with single parents and combined families. He says increased construction of higher density dwellings means higher affordability for single parent families and other family combinations.

“Higher density often creates more efficient builds and better price points, so there is a broader market that can participate,” Fraser says.

He says the desires of tenants are changing, too, with lower maintenance sections and materials in demand, with less of a focus on how the house looks and more on its functionality and quality of construction.

Selling Up And Renting

‘Baby Boomers’ are the fastest growing and wealthiest population segment in New Zealand, so building and therefore buying homes that accommodate them is obviously an intelligent investment.

Investor Jeremy Baker believes looking to accommodate this group into the future is a great way to ensure quality tenants. He recently demolished a single, older brick and tile dwelling on a section in Chartwell, Hamilton, and replaced it with two new, smaller dwellings in order to cater to the older market.

One of the dwellings is accredited with a five star Lifemark rating and the other is three star. Baker says the cost of the five star dwelling was only marginally more to build, while the rent was significantly higher than the other dwelling.

“The cost of building the [five star Lifemark] one that has level entry and wide hallways was probably only an extra $6,000- $7,000,” Baker says. “We are getting $370/ week on that one, and we are getting $330 on the other one. $370/week is top dollar for twobedrooms in Hamilton. No-one is getting more than that.”

Baker recommends that even if an investor doesn’t want to go so far as doing level entry showers and wide hallways they can do such simple things as installing lever handles on doors and moving power points higher up on walls.

Baker approached GJ Gardner to do the build and they were happy to incorporate Lifemark Standards into the design. Interestingly, the couple who rent the three-star Lifemark dwelling contacted GJ Gardner to see if there were any certified homes being built, as they wished to sell their large family home to release the money for retirement and rent an easy care property.

With a growing need for such homes, Baker says he will continue to look for suitable properties to develop in this way.

“It’s basic supply and demand and it’s pretty obvious there is a need there – as to whether it is being catered to or not?”

Quick Facts

  1. 1800,000 people in New Zealand will need to move into aged care facilities or live in appropriately designed homes in the next 10 years.
  2. 1 in 5 people will be aged over 65 by 2030.
  3. 59% of people in New Zealand aged over 65 have a disability.
  4. 11% yearly increase of households in New Zealand.
  5. 2.14m homes in New Zealand by 2038.
  6. 14% of the population currently 65+. By 2032 21-22%. By 2063 25 – 32%.
  7. In the last year over 350,000 people were injured by falls, slips or burns in their own homes – costing ACC over $395m.

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