New Zealand’s housing crisis: Older Kiwis in large homes, younger families struggle

By Susan Edmunds of RNZ

Many four-bedroom houses nationwide are lived in by only one or two people, new data shows.

Census data reveals the proportion of homes with four or more bedrooms being lived in by one or two people is as high as 62% in Thames-Coromandel, 56% in Kaikōura, 54% in Buller, Central Otago and Westland, and 55% in the Mackenzie district.

In Auckland, it is 27%, Wellington 30% and Christchurch 36%.

People living in homes bigger than they need are sometimes blamed for restricting housing supply.

A 2020 paper by Richard McLaughlan of Victoria University suggested there were many large dwellings more suited to young and expanding families being “under-utilised” by the older generation. He said there could be a system of financial incentives and Kiwibuild-style development to produce homes that might better suit these people.

McLaughlan said the tax system also created an incentive to stay in large houses in well-located areas, in return for increases in equity.

The proportion of homes with two or more spare bedrooms has increased substantially since the early 1990s.

It was 40.3% last year, compared with 30.2% in 1991. During this period, the composition of households has changed while homes have increased in size.

There are almost 687,000 houses nationally with two or more bedrooms spare and almost 550,000 with one bedroom spare.

Infometrics chief forecaster Gareth Kiernan said the growth had been largely among people aged 65-69 and 70-plus.

“This result is probably at least partly due to improved health outcomes, which mean people are able to continue living independently and in a bigger home for longer than in the past.”

He said it was a multifaceted issue.

“There has been a trend towards larger houses up until about 2010 that has meant there has been an increasing proportion of people who are consuming more house than they need. We’ve also had an ageing population, and with older people naturally more likely to have under-utilised housing because their children have left home but they are still living in the family home, there’s a larger proportion of people falling into this category.

“I think we’ve also seen a gradual change in behaviour over the last 30 years, where more people are now choosing to retire in the main centres rather than moving to Tauranga — as it was in the 1990s, the Kāpiti Coast or Timaru. Without that catalyst of moving to a retirement location and naturally downsizing as part of the process, it means there will probably be a greater proportion of older people who continue to live in the family home and have under-utilised housing.”

CoreLogic chief property economist Kelvin Davidson said if people with excess space moved to smaller houses it would help ease supply pressures.

“But that’s a choice for the individual to make and ultimately, I’d still just say that building more houses in future — of the right size, type and location — is still the best approach.

“The Government is obviously pushing pretty hard on that right now.”

Opes Partners economist Ed McKnight said most people valued having extra space and sometimes a spare bedroom might be doubling as an office.

“And, although it might not be lived in all year round, they’re often used for friends or family to stay.

“I also wouldn’t look at this thinking that some people are hoarding rooms. For instance, a young couple might decide to buy a three-bedroom house even though it is just them. Their plan might be to have two children, each with their own room. Or they might have one as a child’s room and one as a guest bedroom.

“Similarly, a quarter of households have just one person. But that person might value having the extra space, for instance, if they are a parent who likes to have their children and grandchildren to stay. What this data shows is that many Kiwis are willing to spend the money to have extra space because that is how they want to live. And if that’s how they want to allocate their spending, then that can make sense for their situation.”

Economist Shamubeel Eaqub said asking people to move to smaller homes was not easy.

“There’s an issue of where people go to downsize. As there is often insufficient stock of smaller homes — and slow supply — meaning selling a big old house doesn’t necessarily buy you a smaller-sized home that’s suitable for an older person.”

People often wanted to stay in their communities, too, Eaqub said.

He said the data also showed the heaviest crowding was happening in areas such as Māngere-Ōtāhuhu, Ōtara-Papatoetoe and Manurewa.

Porirua, Gisborne, Ōpōtiki and Kawerau also had relatively higher levels of crowded homes.