Aging Population & NZ Property: What It Means for House Prices, Interest Rates & Your Retirement

Welcome to another bonus episode of the Property Apprentice Podcast, hosted by Debbie Roberts, financial adviser and co-founder of Property Apprentice. In this episode, Debbie unpacks how New Zealand’s aging population is reshaping the future of property investment, interest rates, housing supply, and banking services. 

• What happens to house prices as more Kiwis reach retirement age?
•  Will there be an oversupply of large homes in aging regions?
•  How could long-term interest rates shift due to demographic trends?
•  What are the implications for retirement planning, reverse mortgages, and rental demand? 

We’ll also dive into insights from the Reserve Bank of New Zealand (RBNZ), Stats NZ, and the New Zealand Treasury, highlighting potential risks and opportunities for investors—especially with the median age projected to rise to over 45 by 2050. 

Whether you're a property investor, a future retiree, or a Gen Z planning ahead, this episode offers crucial takeaways: 

• Why smaller, single-level, low-maintenance homes are becoming more attractive
• How shrinking working-age populations affect NZ Superannuation sustainability
• What changes banks may make in response to higher deposits and fewer mortgages
• Tips for adapting your investment strategy in a changing economic environment

Register for our FREE event: "How to Succeed With Property Investing"
👉 https://www.propertyapprentice.co.nz

Don’t forget to subscribe, like, and share this episode with anyone planning for retirement or exploring property investment in New Zealand.

Transcript

 Welcome back to the Property Apprentice Podcast. I'm your host, Debbie Roberts, financial advisor and owner here at Property Apprentice, bringing you another bonus episode that helps you to make smarter decisions in your property investment journey. Today we are discussing a topic that qui that's quietly reshaping the landscape of property and finance here in New Zealand, and that is our aging population.

A recent briefing paper from the Reserve Bank of New Zealand, the RBNZ, outlines how our aging demographics could influence everything from house prices and interest rates to banking services and retirement options. We'll break it down for you. Highlight the risks and discuss what this all means for the future of property investment in New Zealand.

Let's start with the big picture. According to stats NZ by 2051, it's projected that around 1.46 million people, that's about 25% of New Zealand's total population, will be aged 65 or older. That's an increase from just 16% in 2020. To put it in perspective, in 1970, the median age in New Zealand was 26 years.

In 2024, it was around 38 years. By 2050, it's expected to reach over 45 years as the median age in New Zealand. This shift isn't just about age. It   📍 affects labor force participation,   📍 housing preferences,   📍 and the way people save, spend, and borrow money.  So let's talk housing. The RBNZ briefing paper suggests that as the population ages, there'll be less demand for larger homes.

Particularly from older households who no longer need the space. In other words, people who are ready for retirement don't need to have extra bedrooms for their little kids anymore 'cause they're no longer little kids. Many retirees may sell their properties to unlock cash for retirement, which is gonna put downward pressure on house prices, especially in regions with older populations.  📍 

It's also likely that the composition of new builds will likely change with an increased focus on single story homes,  smaller footprints, and low maintenance dwellings. The shift is already starting to show. A 2023 treasury report pointed out that regions like the West Coast, Marlborough and Thames Coromandel have some of the highest median ages and could see an oversupply of larger family homes in the coming decades.

For property investors, that's a potential risk of declining capital value or rental demand in areas with aging shrinking populations. The RBNZ notes that an aging population can put long-term downward pressure on the neutral interest rate. That's the rate that supports full employment and stable inflation without being expansionary or contractionary.

Why?   📍 Because older populations tend to save more and borrow less.  That increases the supply of Loanable funds and reduces demand, which could lower interest rates. Also with older populations spending less in the economy, you know, because they're saving more. Then, um, that would also potentially bring down interest rates.

But here's the catch. As people begin to spend their retirement savings, this could actually have the opposite effect, putting upward pressure on rates.   📍 For example, if they downsize their home and then spend more because they've got more money to spend,  then that could inflationary pressure on, which could increase interest rates.

If large numbers of retirees begin selling their properties to increase equity, that could intensify some price corrections in some markets. In other words, an oversupply of certain types of properties. From a banking perspective, lower demand for mortgages and higher savings could reduce banks' income from lending,   📍 especially housing loans, boost deposit funding as retirees lean towards term deposits and lower risk savings products,  push banks to focus more on wealth management, retirement planning, and alternative financial products like reverse mortgages or annuities.

But here's something interesting. As of mid 2024, there's only around $1 billion in reverse mortgage loans outstanding in New Zealand compared to a massive $360 billion in total housing loans. That's a huge gap and a potential area of growth for banks if more retirees look to unlock the value of their homes without selling.

As people age, their appetite for risk generally declines. The RBNZ points out that older investors are more likely to shift funds from equities to fixed income, move KiwiSaver balances into conservative funds, and prioritize income stability over high returns, but with low interest rates this creates a bit of a conundrum.

Returns on term deposits might not be enough to keep up with inflation. So some retirees might feel forced to invest in risky assets just to meet their income needs. So let's talk risk. Here are some of the potential vulnerabilities outlined by RBNZ and other sources.   📍 Oversupply of family sized homes in the regions with shrinking and aging populations, and a reduction in housing turnover, which affects liquidity and market stability.

 Less responsiveness to monetary policy because older people are less likely to have mortgages, so rate cuts might not stimulate spending as effectively. Potential increased reliance on government support if retirees exhaust their savings or can't access enough equity. Urban planning challenges, especially around accessibility, healthcare and housing design.

In short, the financial system may be more stable in some ways, thanks to increased deposits and reduced credit risk, but the property market could see more pressure, especially in areas not aligned with the needs of older Kiwis. As a financial advisor, here are a few things you need to take into account in light of these developments.

Number one, consider your future buyers and tenants.   📍  📍 Properties that appeal to retirees like single story homes or low maintenance units could be in higher demand.  Number two, watch the demographics in your investment areas.   📍 Some regions may face population decline while others with younger, more diverse populations may stay more resilient.

 Number three,   📍 diversify your income streams. If you are heading towards retirement, think beyond property like annuities, term deposits, and even part-time income options might be worth exploring.  Number four, stay up to date. We are entering a period of change and decisions you make now could shape your financial future for the decades to come.

So just before I wrap things up, there's something else that I thought might be of interest to you. There was a, a recent paper that was released and this showed that because of our aging population at the moment in 2025 for every person in working age. Now, that does not mean that they're actually employed.

This is just working age people. At the moment there's 3.8 New Zealanders in working age. Per one person on the superannuation over the age of 65, so that means that 3.8 people who could potentially be earning an income and paying tax to help support people on the government superannuation. Are you with me? Now,

because we've got an aging population. By the time Gen Z retires, there could be literally only two working age people per person over the age of 65. And if one of them is on another benefit, that means that one person will be required to help pay all the tax for all of the beneficiaries, including government Super.

And so my advice to you is if you are a Gen Z or if you know someone who's Gen Z, tell them that it is never too soon to start working on their financial future. In fact, the sooner you start, the easier it gets. So yeah, highly recommend that you look into into improving your financial position as quickly as you can, as soon as you can.

That wraps, that wraps up today's episode on aging populations and how they're shaping the future of housing, banking and investing in New Zealand. I see this as being massive opportunities for people of all age groups, you know, and we've also, we've already seen a shift in the types of properties that developers have been building.

They've been building more smaller bedroom properties because of this statistic that we are seeing. If you found this, uh, this episode helpful, please consider subscribing and sharing this episode with someone who's thinking about planning for their own retirement or thinking about their next property move.  📍  📍 

And remember, we are here to help register for one of our free events called How to Succeed With Property Investing. You can register online at www.propertyapprentice.co.nz whether you're just starting out. Or thinking about your next step. We've got the tools to help guide you through with our wraparound service.

 So until next time, I'm Debbie Roberts. Thanks for listening and take care. 

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