Finding the Best Fit: Housing Downsizing and Older People in a - - PowerPoint PPT Presentation

Finding the Best Fit: Housing Downsizing and Older People in a Changing Society. House Price Dynamics

Professor Laurence Murphy School of the Environment, University of Auckland Dr Michael Rehm Department of Property, University of Auckland August/September 2016

From ‘Home’ to Financial Asset

Owner-occupation has assumed an important position in housing systems in a number of countries

• “Ontological Security” (?)
• Favoured policy position
• Liberalisation of mortgage markets

Homeownership & Ageing Consumption of housing services (reduced poverty in old age) & financial asset (the potential to extract equity)

Homeownership & Asset based welfare

Issues Traditional Welfare Systems challenged by expected Ageing Population Policy makers considering new welfare models Asset Based Welfare Citizen as ‘actuarial subject’ assessing lifetime risks over life- course (Homeownership as financial asset & Possible pension) Housing as a pension: A Problematic Narrative Homeownership- Fragmented and Differentiated Increased dynamics of liberalised mortgage markets promoting HEW and extending debt into old age

Ageing and Downsizing

“… a decrease in dwelling size (i.e. number of rooms and/or spatial dimensions), and/or garden/yard area and or monetary value” (Judd et al 2014.p1). Possible Movements Property

Large to small house (+ equity release) Large to large house (+ equity release) move to different housing market

Tenure

HO to HO, HO to Rental or License to occupy

Research Decision-making process & Financial Scenarios

NZ Issues

Home Ownership major tenure but declining Housing the major component of Household wealth

1991 = 74% 2006 = 66.9% 2013 = 64.8%

RBNZ (2012) FSR

Releasing Housing Wealth?

RBNZ 2016 (http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-values)

1990= $123bn 2000= $229bn 2010= $609bn 2013= $719bn 2014= $768bn 2015= $873bn 2016= $905bn

Spatial and Temporal dimensions of housing markets Broad Trends

2016 MURPHY, L. and REHM, M. Homeownership, Asset-based Welfare and the Actuarial Subject: Exploring the Dynamics of Ageing and Homeownership in New Zealand. In Cook, N, Davison, A. and Crabtree.

• L. (eds) Housing and Home Unbound: Intersections in

economics, environment and politics in Australia, Routledge/Taylor and Francis, London.

National House Price Appreciation Spatial Patterns Regional Housing Typologies Submarket Case Studies

The Geography of House Prices

Simple ‘First-cut’ at mapping price dynamics Median house price data 1990-2013 Purchase price expressed in 2013 dollars (real gain)

Real House Price Appreciation

Low capital growth widespread High growth concentrated in key markets First Cut: Median House Prices

Auckland

Considerable intra-urban variation Implications: Variation in ‘Equity release’ potential & possible ‘Downsizing strategies’

National House Price Appreciation Spatial Patterns Regional Housing Typologies Submarket Case Studies

Regional House Price Typologies

Prices graphically depicted to identify patterns Median house price data 1990-2013 Purchase prices expressed in 2013 dollars (real)

Housing Market Typologies

Steady Appreciation

Large Cities

Step-Change

Rural Areas Small Cities

National House Price Appreciation Spatial Patterns Regional Housing Typologies Submarket Case Studies

Submarket-level Price Appreciation

Capital gains determined at individual property level Paired house price data 1997-1999 & 2011-2013 Purchase prices expressed in 2013 dollars (real gain)

1998 2011 Real Capital Gain/Loss

Address Floor area Land area Cladding Condition Vintage

Submarket case studies identified (33 in total)

Capital gains experienced by individual properties

Petone ‘Residential Dwellings’ Petone ‘Residential Flats/Apts’ Mean $193k Mean $66k

Capital gains experienced by individual properties

Simply a case of “Location, Location, Location” OR do other factors like cladding type influence outcomes?

Mean 58%

Wellington ‘Res Dwellings’ Monolithic

Mean 37%

Real Appreciation Rates (Monolithic-clad vs other)

Mean 84%

Auckland ‘Residential Dwellings’ Non-monolithic

Mean 58%

Auckland ‘Res Dwellings’ Monolithic Wellington ‘Res Dwellings’ Non-monolithic

AUCKLAND Monolithic Houses Appreciated

26% less

WELLINGTON Monolithic Houses Appreciated

21% less

Mean 36%

Wellington ‘Res Flats’ Monolithic

Mean 18%

Real Appreciation Rates (Monolithic-clad vs other)

Mean 60%

Auckland ‘Residential Flats’ Non-monolithic

Mean 41%

Auckland ‘Res Flats’ Monolithic Wellington ‘Res Flats’ Non-monolithic

AUCKLAND Monolithic Flats/Apts Appreciated

21% less

WELLINGTON Monolithic Flats/Apts Appreciated

18% less

Analysis of Housing Stock

Analysis of Housing Stock

Source: NZ Census 2013

Analysis of Housing Stock

Source: NZ Census 2001 & 2013

Over 60%

• f new

dwellings in Auckland built since 2001 are 4+ bedrooms More than 1 in 5 new homes are 5+ beds

Analysis of Housing Stock

House sizes have increased (140 to 200+ sqm) Apartment sizes are consistent (~100 sqm)

Market conditions and liquidity Ability to sell (liquefy) residential property is affected by market conditions

• Homes easy to sell (highly

liquid) while prices rising

• Difficult to sell when

prices stagnant or falling

• In order to withdraw

equity timely in a depressed market, a lower price might be req’d

Conclusions

Emerging Dynamics i) in Housing and Welfare Systems (Wealth/Equity Release/Pension

processes)

ii) in opportunities for housing ‘downsizing’ House Price dynamics shape individual household’s opportunity space Need to examine the impacts of housing markets (sub-markets) on households’ downsizing decisions & opportunities.