Boomers downsize while millennials flee the city

by Ksenia Stepanova07 Aug 2018

When your child leaves home, what do you do with that extra room? And what about the back yard, which now only seems to be of interest to the neighbours’ cats?

While some homeowners go the way of renting out rooms for extra cash, more and more baby boomers are now unlocking their land-locked wealth and choosing to sell off their land through subdivision, before packing up and moving to the regions.

According to Kiwibank’s chief economist Jarrod Kerr, an inter-generational shift is happening in New Zealand, and the parents aren’t the only ones moving away. Young Aucklanders who have been priced out of the city’s grossly unaffordable market are also choosing to relocate.

“Once the kids have flown the coop, the need for a back yard diminishes,” said Kerr. “We’re seeing Auckland boomers leaving in droves for the cheaper regions. The exodus has boosted the housing markets in Northland, Manawatu-Wanganui, Waikato and the mighty Hawkes Bay.

“There’s been a flood of interest from northerners on a southern pilgrimage. House price growth reached 13% in May in Manawatu-Wanganui. Southland is also a part of the country that has shown a little more resilience in sales activity, and house prices lifted 12% in May, compared to 9.5% a year ago.”

Interestingly, Kerr says, the high-performing regions also have some of the highest rental yields. Meanwhile, Auckland housing has been “put on ice,” with the most popular rental areas including parts of Gisborne, Rotorua, Hawkes Bay and Manawatu-Whanganui.

“The wind has died down in the City of Sails following a period of phenomenal activity,” said Kerr. “The government is also hearing up to implement policies targeted at speculators. The policies, and the uncertainty associated with them, may hamper house price gains over the next few years but we don’t expect a major correction.”


Related stories:
Realtor figures show homebuyer choice is declining
Housing market slowdown likely to continue


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