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Is New Zealand Facing a Baby Boomer Housing Bust?

Author/s: Bob Hargreaves

Date Published: 1/01/2008

Published in: Volume 14 - 2008 Issue 4 (pages 383 - 398)

Abstract

The baby boomer generation (1946-1964) represents a population bulge that isn’t replicated in the younger generation who might be expected to live in the houses vacated by the baby boomers. Several authors have observed from 2010 there are likely to be more sellers than buyers, hence price reductions. This paper takes a contrary viewpoint. The following reasons are advanced as to why a baby boomer housing bust is unlikely to occur in New Zealand: positive demographic projections, reduced occupancy rates per dwelling, the elasticity of housing market supply, increasing numbers of investor buyers, policies relating to encouraging retirement in place, legislation underpinning the price of second hand houses, real incomes rising and intergenerational transfers. At a national level, demographic projections and housing supply characteristics are the variables most likely to influence future house prices. The paper then goes on to consider the regional implications of a baby boomer housing sell off, by examining possible future changes in housing preferences as well as trends in internal migration and regional economies.

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