What about the last-time house buyers? 'Downsizers' need more options

"Last-time Buyer". Heard the terminology before? Probably not, because no one cares about them.

They're older, child free, own a home and are not impoverished.

Quite frankly, what is there to care about? First-time buyers are the political hot potato thanks to sky-high house prices.

A last-time buyer could also be called a "downsizer". They're often fit, healthy retirees, still beating their chests and scaling fences.

We're not talking about retirement home candidates. Health and mobility are a future driver, but not the full story.

Financially they need access to their capital and the rest of New Zealand needs access to their under-occupied homes. As a source of housing supply, last-time buyers are a huge, untapped opportunity.

Under-occupied homes

Think of the empty bedrooms gathering dust. If the British numbers are anything to go by, ghost bedrooms quickly add up. A report by Legal & General calculates 7.7 million spare bedrooms in the UK, equivalent to 2.6 million family homes. This represents 10 years of housing supply based on government targets. Around 30 per cent of Brits want to downsize, but only 7 per cent do it. The right types of houses are not available.

In New Zealand there is noise about ghost properties with absent rich occupants, empty beach houses and housing New Zealand properties with spare rooms. None of this tackles supply pressure for first-time buyers or middle New Zealand. You can't change location or value to match the demand gap.

415,000 hidden spare rooms

Looking at the statistics available in New Zealand, a rough back-of-the-envelope calculation says 672,000 Kiwis are aged over 65. This is a conservative measure of last-time buyers who could downsize and free up spare rooms. The British numbers use those aged 55-plus.

Of these, three-quarters (504,000) own their home. Those with spare rooms are likely to be the half who live as couples and the 30 per cent who are single. This gives 277,200 houses in New Zealand that are under-occupied.

From here we have to take a guess. How many have spare rooms? My over-65 parents have three. There will be a wide variation, so remaining conservative lets say the average is 1.5 rooms.

138,000 ghost houses – five years' supply

We now have a walloping 415,800 spare rooms in Kiwi homes. This represents an untapped supply of 138,600 three-bedroom houses. If even a fraction downsized, it would have a major impact on supply. The real perspective comes when you compare this to new residential building consents. These sit at 28,000 annually (to May 2016). Our over-65s are sitting on five years of supply.

Yet developers fail to cater for last-time buyers, continually building the four-three-two in suburbia (four-bedroom, three-car garage, two-bathroom) often in the outskirts of cities. Inner city cheese-box apartments fail to appeal through lack of space and storage. Retirement villages are a step too far.

The last-time buyer doesn't want to live in the cheapest area, they don't want a major renovation at age 70 and they're not obsessed with capital growth, because it's inherited, not spent. The British study shows us their main requirements are to downsize to a two-bedroom property, live in the same area, be near family and friends and have easy access to healthcare and shops.

Regional retirement bottlenecks

Some New Zealand cities will face more intense supply pressure with the rampant aging population sucking up spare rooms. Canterbury sits close to the national average with 15 per cent of the population over 65. Areas like Wellington have less than 10 per cent of residents in this bracket. Yet the Kapiti Coast spikes to 25 per cent and Marlborough at just over 20 per cent, indicating the capital spits it retirees out a little north and south.

Nelson and Tasman have a growing problem. Tasman's population of over-65s is almost 18 per cent, but between the last two census collections, their numbers grew 40 per cent. The region is a magnet for retirees who sit on ghost bedrooms because their needs are not catered for.

By 2058 over a quarter of the New Zealand population will be 65-plus.

The bedroom bottleneck isn't going away. Perhaps it's time to make the needs of this group a political hot potato.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.