NZ Herald - Plus Feature February 2024

INSIDE

Retire to luxury

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Introducing Orion Point, Auckland’s best-kept retirement secret. Transform your retirement from ordinary to extraordinary at Metlifecare’s stunning new village in Hobsonville. Find out more inside.

Located on the Hobsonville peninsula, Orion Point is the epitome of luxury retirement living with sweeping views across the Waitematā Harbour.

CATALINA BAY HOBSONVII LLE POII NT

Live in luxury at Orion Point

Orion Point

Luxury heated indoor pool, spa and gym

Our new Catalina Clubhouse is now open, with brand-new apartments and garden villas available. Don’t miss the chance to retire to a lifestyle of luxury, beauty and exclusivity at this unparalleled community.

More great reasons to visit

To experience all that this stunning new village has to offer, scan the QR code below or call Adelina on 09 300 0518.

Village Open Day Saturday 9 March, 10am–2pm Join us for village tours and light refreshments.

Lush gardens, village green and pavilion

SCOT T POII NT

Short coastal walk to Catalina Bay WAITEMATĀ HARBOUR

Live Entertainment at Orion Point Saturday 23 March, 11am–2pm A live performance by The Madeleines, FREE Duck Island ice cream and more!

Scan the code to visit our website and get in touch with the Orion Point team

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Enjoy coastal harbour views

35-minute ferry ride to Auckland CBD

Brand-new apartments & villas A variety of one, two, and threebedroom apartments and spacious two-bedroom villas are available.

Ask us about our

latest offers*

Catalina Apartments from $625,000^ Garden Villas from $1,455,000^

Find a village that feels like home Call Adelina on 09 300 0518 | orionpointsales@metlifecare.co.nz 62 Tahingamanu Road, Hobsonville | metlifecare.co.nz ^ Price is for an Occupation Right Agreement secured by a first ranking mortgage in favour of the statutory supervisor on behalf of the residents. Price valid for 30 days from time of printing. Stock availability subject to change. Car park not included in price unless indicated. Product images are indicative only. * Offer available on Orion Point two-bedroom garden villas only. Terms and conditions apply, contact your Sales Executive for more information.

A New Zealand Herald Comme ercial Publication | Thursday 29 February, 2024

THE PROPERTY ISSUE Homes of the future | Selling your home to fund your retirement 2024’s hottest design trends revealed | First-home buyers are getting older

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inside

Homes of the future: trend predictions

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First-home buyers are getting older despite falling house prices

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The $25.2 billion mortgage debt hanging over Kiwis aged 65-plus

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More is more: 2024’s hottest design trends revealed

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What you’d need to sell your home for to fund your retirement

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Writer Diana Clement | Design Courtney Wenzlick | Commercial Revenue Manager Kelly Spice Head of Commercial Publishing & Innovation Margaret Hawker Advertising enquiries E: Kelly.Spice@nzme.co.nz M: 021605297

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Photo/GettyImages

Homes of the future: trend predictions Completed new homes and low maintenance “lock up and leave” homes will be popular.

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oodbye villa and welcome lockup-and-leave homes. Kiwi home buyers’ tastes are changing, and low maintenance new homes are increasingly stealing the spotlight in the housing market.

The homes Kiwis buy have changed over recent decades, both because of changing lifestyles, but also cost. First home buyers in particular can’t always afford to buy a threebedroom home on a quarter acre section.

Uncertainty around mortgage interest rates and inflation could hamper many homebuyers’ plans in 2024. If mortgage interest rates remain high, some first home buyers, or those wanting to trade up, could find they’re locked out of borrowing.

Mortgage interest rates are loosely based on the Reserve Bank of New Zealand’s official cash rate [OCR]. The Reserve Bank raises and lowers the OCR in order to control inflation which most New Zealanders acknowledge is too high for comfort.

The OCR, which bottomed out at 0.25

between March 2020 and September 2021, gradually rose back to 5.5 in October last year and hasn’t budged since. It is expected to start falling again this year, but economists are not all in agreement as to when that will start, and how fast the OCR will fall. In the meantime, homeowners must pay high mortgage interest rates. Only when the Reserve Bank starts to drop the OCR will mortgage interest rates follow suit.

At the beginning of February floating interest rates from the four Australian banks ANZ, ASB, BNZ and Westpac, along with locally owned Kiwibank were in the mid to high 8% range and two-year fixes from the banks were a little below 7%.

Inflation, which the RBNZ uses the OCR to control, is falling at a quicker pace than forecast last year, says ASB chief economist Nick Tuffley. But it is still sticking around.

On the other hand, positive news for first home buyers is that house prices in some regions may still be falling from the

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Photo/GettyImages

2021 peak. Barfoot & Thompson real estate recorded a fall in Auckland house prices in January.

“The median price for the month at $966,500 was down 7.1% on December’s median price,” says Peter Thompson, managing director of Barfoot & Thompson in late January.

For those who can afford to buy homes in New Zealand hassle-free lock-up-and-leave homes, single-level dwellings will be the properties to watch in 2024, say industry insiders.

Bayleys head of insights Chris Farhi says the classics of the New Zealand housing market such as villas and brick and tile units, would always be in demand. However, buyer preferences were evolving. That includes a trend towards modern lock-up-and-leave homes, with their low-maintenance designs.

First home buyers and downsizers are leaning more towards apartments. They are also ideal for investors and for people who no longer want to maintain a garden.

Apartments can also be turned into short term holiday rentals, providing owners with income.

In an interview with OneRoof at the end of last year Farhi says the new government’s policies of reinstatement of mortgage interest deductibility against rental income, and reduction of the bright-line test from 10 years to two years from July 1, would likely bring back investors into the apartment segment of the market.

The ageing demographic of New Zealand is contributing to a growing popularity of single-level properties, such as apartments or ground-level homes, Farhi adds. There is also a trend toward internal elevators to make

multi-level homes more accessible.

Other property types growing in popularity include ready-built brand new “turn-key” homes, that come without the budget overruns and completion timeline blowouts of off-the-plan purchases. With turn-key there is no need to deal with contractors, there is ease of borrowing, and more certainty in general, says Farhi.

Bill McKay, an architecture lecturer at the University of Auckland, predicts a shift towards denser living, with a departure from the traditional concept of the “forever home.”

In the past, families would buy a suburban home and stay there to raise their children.

That is changing with young couples opting for apartments and townhouses as their first home, to get on the property ladder, he says.

They may begin a family in the smaller-style home, but then trade up to a standalone home when funds permit.

In an interview with OneRoof, McKay said he is seeing a decline in the demand for large backyard-centric homes and emphasises that children playing with balls in large backyards is often a thing of the past.

The sticking point there may be that the numbers of new homes being consented is falling, which might put pressure on sales. Figures from Statistics New Zealand in January showed that around 25% fewer homes [including apartments and townhouses as well as standalone] were consented in 2023 than 2022. The biggest decline was for apartments.

Fewer new builds is not the only concern.

Buyers do need to be aware that not all new homes, especially townhouses and apartments are well built, McKay says. Nonethe-less budget-conscious purchasers are

willing to buy less well-built stock.

McKay also sees growing demand for five to six-story medium-density apartment buildings in areas with good public transport and along main roads. Apartment builder Ockham, which is often held up as a posterchild, has built a number of highly successful developments on Great North and New North roads in Auckland.

McKay says there is diminishing interest among home buyers in purchasing fixer-upper homes for DIY renovations.

Increasingly buyers prefer to buy readyrenovated, he says.

It’s likely, says McKay, that the trend of investors buying, renovating, and flipping older homes will increase. Those who do buy to renovate sometimes overestimated their DIY abilities.

The other big change on the horizon is the demand for homes for multi-generation families. McKay says observations made about New Zealand housing often centre on the white, middle-class demographic.

The population is changing rapidly, however. Pasifika families and some Asian communities were looking for intergenerational living options, especially in Auckland, he says.

In August OneRoof reported on a trend to six-plus bedroom new-build homes in Flatbush and surrounding suburbs in South Auckland.

INSET FROM TOP: ASB chief economist Nick Tuffley, Peter Thompson, managing director of Barfoot & Thompson, Bayleys head of insights Chris Farhi Photo/Supplied

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The average age of first-home buyers in the second quarter of this year was close to 37 years. Photo / Fiona Goodall

First-home buyers are getting older despite falling house prices Uptick in the average age of new entrants, research shows.

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ouses may have been cheaper, but the average age of first-home buyers went up during the market downturn, with the spike in interest rates and inflation the likely causes of the age increase.

OneRoof analysis of data supplied by credit bureau Centrix shows the average age of first-home buyers taking out a mortgage has risen 2% from a five-year low of 35.7 years in Q4 2021, when house prices were peaking, to 36.7 in Q2 2023.

The rise brought to an end the steady decline in first-home buyer ages since the start of 2018, when the average age of a new mortgage holder was 37.6 years.

The uptick in first-home buyer ages came at a time when interest rates were rising and cost of living pressures worsened, with the Official Cash Rate jumping from a low of 0.25% to 5.5% over roughly the same period and annual inflation rising from 1.5% to a peak of 7.3%, but now sitting at 6%.

The data also shows a sizable increase in the size of first-home buyer loans. The average first-home buyer mortgage in Q1 2018 was $358,326. This rose to a peak of $591,734 in Q1 2022 but has subsequently dropped to $553,924 for Q2 2023 – up 54% on Q1 2018.

Centrix managing director Keith McLaughlin says the average age of the typical first-home buyer has been gradually falling, but from 2022 the average age has

been steadily rising. He cites a tightening in the economy as the reason.

Long-term, the average age of first-home buyers in New Zealand has been climbing.

In 1970 it was just 25. Worsening housing affordability has had a big impact on firsthome buyers over the past generation, but other factors have also come into play, say experts.

The increase in the number of Kiwis attending university over the last 50 years has pushed up the age at which Kiwis enter the workforce, while student loans have had an impact on the ability to save.

Another complication is the fact that Kiwis are marrying later. According to Stats NZ, the median age at first marriage or civil union in 2021 was 29.6 years for women and 30.7 years for men, compared with 27.5 and 29.3 respectively in 2001. In 1971 the median age at first marriage was 20.8 years for women and 23.0 years for men.

Stats NZ data also indicates that 64.5% of households owned their own homes in 2018, compared to the peak of 73.8% in the 1970s.

The 2018 figure was the lowest since 1951.

Data for the age of first-home buyers does differ according to the methodology used. In 2021 CoreLogic and Equifax research noted that the average age of first-home buyers had been between 34 and 35 years from 2016 to 2020.

The research showed that the average

first-home buyer age was lower in provincial areas, with the average age of first-home buyers in Manawatu, Masterton, Rangitikei and Timaru standing at 31.

“The figures haven’t been refreshed, but I’d be surprised if it’s changed massively since then,” CoreLogic head of research Nick Goodall told OneRoof. “In fact, the recent downturn may have meant some people can access the market a bit sooner than that age.”

Loan market mortgage adviser Lisa Meredith says there are drawbacks to buying later in life, including the ability to secure credit from the banks.

While some of her clients are buying in their 20s, she also gets first-home buyers in their 40s and 50s. The oldest first-home buyer she had last year was aged 60.

Meredith says lenders pay particular attention to older first-home buyers who have a low deposit, such as 10%. “The banks may say, ‘no, we’ll only do 25-year terms’. It does change from time to time, and we can’t say that a particular bank will always have this policy.”

Once first-home buyers hit their 50s, banks are reluctant to lend for 30 years, says Meredith. Even at 25-year terms, banks want to see a clear exit strategy to ensure that the buyer can pay off the mortgage or sell down before getting too old, she adds.

Sometimes that exit strategy needs to be quite detailed before the bank will approve.

“The [client] might say, ‘I will sell and move to the regions’. But there will often be a requirement to have a bit of detail around that.

“Another factor the banks will take into account is occupation. If you’ve got someone

INSET FROM TOP: Centrix managing director Keith McLaughlin, Loan market mortgage adviser Lisa Meredith Photo/Supplied

who is 55 and is doing a very manual job, such as a builder, what are the chances of them being so physically fit to be an effective builder at 75? It’s quite different to someone who is maybe a consultant,” she says.

“Another thing to be wary of if you are buying [your first home] in your 40s and 50s, and you’re using KiwiSaver, which most people do, is how’s that going to look for them in retirement? They clear out the KiwiSaver at 50, and only have 15-20 years to rebuild that. That becomes a bit of a problem.”

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An increasing number of Kiwis over 65 are heading into retirement with an outstanding mortgage. Artwork / Beth Walsh

The $25.2 billion mortgage debt hanging over Kiwis aged 65-plus 15% spike in the number of retirement-age homeowners still saddled with debt.

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ore and more people over the age of 65 are stuck paying mortgages.

Since June 2018 the number of New Zealanders with mortgages past the age of 65 has risen 15% – from 118,000 to 136,000, according to data from credit bureau Centrix.

It’s a scary number, says Centrix managing director Keith McLaughlin. Even worse, is the 49% rise in total mortgage debt for over 65s in the same period, from $16.9 billion to $25.2bn.

While a third of homeowners in New Zealand are mortgage-free, the figures are a reminder that many Kiwis are likely to be heading into retirement saddled with sizable mortgage debts. The most recent figure, from June last year, means that mortgage holders in the 65-plus age group have an average mortgage debt of $185,294.

McLaughlin says the trend has been partly driven by the higher cost of homes, with the nationwide median sale price up 39% over the five-year period but also up 572% over the last 30 years [a 30-year term is still the most common in New Zealand].

McLaughlin also cites failed marriages as pushing some people to buy later in life than they might have. “If you go back 20-30 years, marriages were more robust than they are today.”

What’s more, low interest rates over the past five years have made people more comfortable to take on debt than they might

have been in the past, says McLaughlin. Fewer over 65s had mortgages 20 years ago because the interest rates were higher, making them more hesitant to borrow.

Back in the 1980s no one had mortgages past the age of 65, says McLaughlin. “You couldn’t get one. If you had a mortgage, you would have paid it back [by 65] because debt wasn’t such an accepted practice in those days. In the 1980s you tended to buy a house and then paid it off over a fixed term mortgage. By the time you got to 65 it was paid off.”

Nor could people extract money from their mortgages for consumer spending, or house renovations as they can now, says McLaughlin.

Today, over 65s can borrow for a wide variety of reasons. “They are borrowing [against homes] to finance businesses, second homes, investment properties, beach houses. Lifestyle has changed.”

People are also working later, says McLaughlin. “I’m a classic example. I’m 65 and I’m not thinking of retiring because [work] is good fun. I’m healthy, and I feel closer to 40 than 65.”

Data from Infometrics backs this up and shows that nearly half of New Zealanders aged 65-69 are still active in the labour market.

The proportion of people over the age of 70 who are still active in the labour market has risen too, albeit at a slower pace. In 1987,

only 5.8% of this age group was still active, 8.8 percentage points lower than today’s participation rate of 14.6%.

Infometrics chief forecaster Gareth Kiernan says it’s quite hard to know what proportion of the workforce is there voluntarily for social contact and intellectual stimulation, and how many people have bills and mortgages to pay and are compelled to work for longer.

“My sense was that the numbers we’re seeing tend to lean more towards people just wanting to remain involved. By the time you reach 70 there is quite a definite drop off in [labour market] participation.”

Not everyone who has a mortgage over the age of 65 has had it for years. Equifax data shows 1.5% of mortgage enquiries in 2023 came from people aged 66+.

In addition to people still paying regular mortgages at retirement, many thousands have taken out reverse mortgages. These are people whose homes may have been paid off, but they need to borrow against the capital to release money to live on. Both Heartland and SBS banks offer reverse equity mortgages.

Financial adviser Maurice Mehlhopt works with older clients. He says that it’s not uncommon for clients to still have outstanding mortgages in their 60s and 70s and find themselves in trouble paying them.

Over 65s with ordinary mortgages can get into difficulties. One client came to Mehlhopt after running into problems with the bank. He had an outstanding mortgage, which was on a 2.9% interest rate with two years to run.

“The client went to the bank and said, ‘Look, I’m really struggling’. The bank said ‘no,

INSET: Financial adviser Maurice Mehlhopt Photo/Supplied no, no, gosh, the last thing we want to do is push people out of their home. What we’ll do is give you a [repayment] holiday. Let’s give it six months and see how you get on’. This all sounds lovely. But of course, they went from 2.9% to the bank’s penalty rate of 7%.”

Some older clients in this situation refinance the remaining mortgage or other debt onto a reverse mortgage, which frees them from repayments and the stress that comes with that.

“I’m working with a lady, who is 72. She has the remains of a mortgage of about $30,000.

She wants to sell her house but needs some money to put into the property to get it ready for sale.

“She wants to go into the sale confidently, so she can say to a real estate agent ‘I don’t need to sell, I want to sell’,” says Mehlhopt. By taking a reverse mortgage, the client was able to clear her mortgage, pay for repairs, and be left with some spending money.

Mehlhopt says reverse mortgages can reduce stress for the over 65s who have a home, but little if anything in the way of retirement savings. “They say to me: ‘I didn’t realise how stressful it was living week to week just on the pension, and struggling, and hoping the fridge doesn’t blow up’.” A reverse mortgage gives them the ability to have coffee with friends and enjoy life. “It really reduces the stress level,” he says.

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| 13

Kiwi homeowners are warming to bold colours and big design statements, some influenced by overseas trends. Photo / Supplied

More is more: 2024’s hottest design trends revealed Minimalism is out, maximalism is in.

I

f you’re tired of minimalism, 2024 is going to be the year for you.

Laura Heynike, founder and creative director of Pocketspace Interiors, says the buzzwords in interior design and homestyling for 2024 are “maximalism” and “individualism”.

She believes homeowners are ready to leave behind the pared back look that has dominated the last six years, where everything was organic, perfect and beautiful.

“We’ve lost the sense of individualism in interior design, and everything just looks the same,” she tells OneRoof. “When you open up a magazine, everything looks nice, but nothing particularly excites us.

“We’re definitely embracing the idea of maximalism, again. Expect a riot of colour.

Think 1970s.”

She says 2024 is about being unapologetically confident with design choices. “Each design element will achieve its full potential, rather than being stripped back to its raw form.”

The thirst for international travel after the Covid lockdown years is having a huge influence on styling choices, Heynike says, noting that travelling Kiwis are warming to the vibrant patterns and textures they’ve seen overseas. One of her clients recently

INSET: Laura Heynike, founder and creative director of Pocketspace Interiors Photo/Supplied returned from Sri Lanka with spectacular

furnishing fabrics and has challenged Heynike to incorporate them into the rest of their home. “It has been an interesting task,” she says.

Heynike expects to see maximalism extending its reach into most Kiwi homes as the year progresses. “I think you’ll see that coming through in cushions to start off with, and then the textiles,” she says.

The maximalism vibe will also build on the curves that emerged in furniture design in 2023, she said. “Bold colours with curved furniture is a really nice marriage in terms of balance,” she said.

Mid-century furniture is also having a revival and fits with the growing popularity of flower prints and Karitane yellows, says Heynike. “Mid-century furniture comes with rich brown wood tones, which make colour pop against it.”

Bold statement rugs are in and a good place to start when embracing maximalism.

“It becomes your statement piece adding instant impact,” Heynike says, noting that an eye-catching rug can woo visitors and become the anchor for a room.

Maximalism may be in ascendancy in style mags, but in real estate it’s minimalism that still rules. Bayleys agent Cristina Casares, who specialises in selling high-end homes, says staged homes are still likely to favour neutral palettes this year, although with some maximalist touches.

“Clients who are renovating their properties for themselves are using strong

colours and a mixture of materials and textures, like marble and parquet wood floors, and mosaic tiles in bathrooms. Some vendors do these things for their own taste, but for resale, buyers will either love it or dislike it,” Casares says.

“The majority of renovated villas, especially when staged by companies like Exhibit One and Ash Road, will be more minimalist,” she says.

When it comes to colours, the dopamine rush is a definite trend for 2024, says Karen Warman, Resene’s marketing manager.

“Dopamine decorating is a trend on the rise.

Just look for bright optimistic hues that bring a smile and add touches of these into your space in furniture, frames and feature walls or your front door. Try pinks, reds, oranges and yellows for a hit of happiness.”

Wall textures will also take off in 2024, as will “slow down” spaces and “emotional escape rooms”, says Warman.

“Small powder rooms usually have little going for them design-wise, so making a feature of the walls helps make the most understated room in the house become a talking point with guests,” she says.

The final word from Heynike is “have fun” with your design, but make sure it’s sophisticated. “We don’t want to go too over the top.”

This article was previously published by

14 |

An apartment block next to a villa in central Auckland. The lift in property values will benefit those looking to retire, but downsizing isn’t cheap. Photo / Ted Baghurst

INSET: Bayleys Omaha agent Victoria Turner Photo/Supplied

What you’d need to sell your home for to fund your retirement Why homeowners in some parts of the country may be left short.

H

omeowners who plan to fund their retirement by selling up their current property and downsizing may be in for a shock.

Retirees would need to make a profit of at least $1 million from the sale of their home if they have no other savings. But that sum doesn’t include the money they would need to spend on buying or renting another home.

According to research by Massey University, a couple looking to enjoy a comfortable life in retirement would need a budget of $1670 a week in the major cities and $1330 a week in the regional centres.

Currently, a couple could expect to get $763.64 a week from NZ Super, which leaves them facing a shortfall of between $29,466 and $46,914 a year, depending on where they live.

Many Kiwi retirees have looked to plug the gap with money made from the sale of their home. But while the rapid rise in house values over the last two decades will have delivered sizable gains to property owners, the cost of typical downsize properties – units and apartments – has risen too.

In September last year, the median value of a new-build apartment or terrace house in Auckland was just under $800,000 while the median value of existing homes in the city was $1.192m. Homeowners in the city might need to be sitting on an asset worth upwards of $1.8m to be able to buy a reasonable apartment and still have money left over for their retirement.

And while many Auckland homeowners will be in a position to afford a comfortable

retirement through downsizing, that option may not be open to many retirees in smaller regional centres where cheaper apartment options are limited and selling the family home and downsizing can only release a few hundred thousand dollars.

Research by the Financial Services Council in 2017 found that 25% of Kiwis expected to sell their home and move into a smaller one to fund their retirement. However, the research also found that the average downsize in New Zealand gave the movers an average of just 3.3 years of income and that, worryingly, 17% of retirees still had a mortgage on their home.

How much spare capital Kiwis release after downsizing depends on where they want to live.

Heritage suburbs such as Devonport, Mt Victoria, and Māori Hill often have a shortage of suitable property to downsize to, which puts a premium on the price, reducing the amount of capital that can be extracted from the move.

Bayleys Omaha agent Victoria Turner says the downsizing phenomenon at retirement age is commonplace, even in her patch, which is home to some of New Zealand’s wealthiest homeowners.

“What we have seen in Omaha over the last few years are retired and semi-retired couples downsizing from a multi-level holiday home to a single-level home. In many cases, they are heading over the causeway to Point Wells where the larger section sizes allow for larger one-level homes that can still accommodate family/extended family. We are also seeing retirees selling the ‘family bach’ for retirement years and to free up funds for family.”

Turner doesn’t want to identify any specific home sales but points out that the median house price in Omaha for the last 12 months is $2.83m compared to $1.78m in Point Wells.

This article was previously published by

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As a family business led by family values, our residents’ quality of life has always been our measure of success.

That’s why our retirement homes are built the way we like to live with plenty of space and all the luxury trimmings that make life more comfortable.

And because having choice is important to us, we make sure our residents have the luxury of choice too. That’s why every home at Matamata Country Club will be unique, with its residents’ own special touches.

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This family-centric approach to the way we’ve built and operated our villages is why our sister village Tamahere Country Club is now the most sought-after retirement community in New Zealand, and why you can expect our newest village, Matamata Country Club will be equally as popular.

Book your appointment with Brendon Russo 027 301 3126 | brendon@sandersongroup.co.nz Office open Monday–Friday, 10am–2pm | 102 Peria Road, Matamata, Waikato matamatacountryclub.co.nz

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