New report includes a snapshot of how housing has changed over the past three decades
The amount being spent on housing costs represents a large proportion of people’s New Zealand superannuation, a large-scale analysis of NZ’s Household Economic Survey (HES) has revealed.
Read more: Reverse mortgage a better option for older Kiwis – bank
The analysis of NZ’s housing costs across age groups using HES found that Kiwis past the age of 65 who are still paying rent are much more likely to be using 40% or more of their NZ Super income on housing. Long-term trends suggest, meanwhile, that more older householders were likely to be renters in the future.
The picture was worse for those still paying off mortgages, said Suzy Morrissey, Retirement Commission director of policy. Eighty per cent of superannuitants who were still paying mortgage were spending more than 40% of NZ Super on housing costs, and more than half were using more than 80% of NZ Super on housing costs.
“When comparing to those who own their homes outright, this is almost totally reversed, with approximately 80% spending less than 40% of NZ Super on housing costs,” Morrissey said. “More than 50% spend less than 20% of NZ Super on housing costs (55% of those aged 65-74 and 70% of those aged 75+). It is important to note that this analysis of housing costs is relative to the income received from NZ Super only and does not factor in other income. However, NZ Super is currently the only income for 40% of those 65 and over, and 20% only have a little more.”
Read next: Ombudsman offers tips on protecting older people against financial abuse
The Retirement Commission showed a snapshot of how housing has changed over the last three decades:
- In 1986, 87% of those in their 60s were homeowners, with mortgages paid off, and for the most part were not in paid work
- In 2018, 80% of those in their early 60s were homeowners, with one in five still paying off mortgages, 20% paying rent, and many still in paid work. Mortgage and rent costs have been rising faster than outright ownership costs
- Based on current trends, there will be a 100% rise in people aged 65 and over renting
- Long term, the balance of homeownership is expected to shift to 60% homeowners and 40% paying rent. By 2048, this 40% will equate to up to 600,000 people
“What all of these insights highlight [are] the impacts of not owning your home outright or paying rent when you are very reliant, or completely reliant on NZ Super to cover those costs,” Morrissey said. “It’s a real challenge for people to make ends meet if they are having to use substantial amounts of their NZ Super to cover housing costs. When NZ Super was introduced, it was with the underlying assumption that those accessing it would be mortgage-free homeowners. Today, the reality is very different. There are declining homeownership rates, more people needing to continue working longer because they still have mortgages to pay, are paying rent, or haven’t been able to save enough to retire.”
