Housing the Baby Boomers – Looking to the future

A recent report by the Salvation Army drew attention to the situation of older people, specifically the “baby boom” generation, who are entering retirement as renters 1. The overall title Homeless Baby Boomers seems rather dramatic. The report is not about homelessness primarily and acknowledges that factors that contribute to homelessness extend well beyond housing. But the sub-title – Housing poorer baby boomers in their retirement – does draw attention to some important social and policy issues.

There are challenges ahead to ensure that older people in New Zealand enter later life with secure and adequate housing. Johnson suggests that 30-35% of baby boomers will be renters as they enter retirement. Dependence on NZ Superannuation (NZS) (there is no mention of Kiwi Saver) will mean that many older renters will require extra assistance in the form of the Accommodation Supplement (AS). Already the numbers of superannuitants needing AS have increased rapidly. But there are doubts about the adequacy of this support, given that policy settings are well out of date. The Johnson report calls for a review of AS policies and also for discussion between central and local government on the provision of rental housing for older people.

A report on older renters was commissioned in 2008, but never published 2. This raised similar issues to the Salvation Army work, pointing out the need for financial assistance for older renters, quality and appropriateness of housing for this age group, including frail and disabled older people. It went further by highlighting the need to integrate social support and housing.

This report, using economic modelling, confirmed increased demand for rental housing for older people over the period 2006-2051, with demand more than doubling for the private sector and central government rentals (based on households where the “reference person’ was 65 plus).

Without going further into the reports themselves, I want to point out four important factors that relate to the problem.

1. The assumption is that NZS will be sufficient to support a basic lifestyle provided that the recipients are home owners and have paid off their mortgages. This has applied since the inception of NZS.

2. The rate of home ownership in New Zealand has been dropping since its peak in 1986, when 73.5% of households were owners, to 64.8% in 2013. And the rate is projected to fall even further in the future. Ownership rates are still high in the older age groups, but this is likely to change.

3. New Zealand housing policy from earliest times has emphasised the goal of home ownership, putting it above rental tenure and imparting it with moral value (ownership was claimed to produce responsible and stable citizenship). As a result, renting has been seen as second class, renters have been stigmatised and renting tenure is insecure. There are issues about the quality of private rental housing and social housing stocks are being reduced, including local authority pensioner accommodation.

Older people may be especially vulnerable if their housing tenure is insecure and if their housing is of poor quality – cold and damp. They are not in a position to easily increase their incomes to make improvements. Renters cannot easily adapt or modify their housing to deal with declining health and reduced mobility.

(However, being a renter does not make one homeless as the Salvation Army title might suggest. In many countries, including France, Germany, Denmark, Switzerland and the Netherlands under 60% of households are home owners and this is not seen as a problem.)

4. Because home ownership is considered superior, renting in New Zealand is associated with social and economic deprivation. Renters tends to have lower incomes and living standards, more hardship and poorer health than owners, not to mention higher housing costs relative to income. It is the poorer people in any age group who are more likely to be in rental housing.

Both studies are basing their projections and estimates on current trends, but there are many uncertainties. Predicting the future is not straightforward in any sphere. Will it be “ageing in place” or residential care? Will new types of intermediate “sheltered housing” emerge? How will these affect the demand for pensioner rentals? There will be regional differences and balance between the landlord groups may change. “Private” landlords include non-profit providers and iwi. They are sensitive to policy settings, as are investors – where financial market motivations also come in. Perhaps the overall challenge for the older people’s rental housing sector is to ensure policy is flexible enough to meet the needs and wants of renters in the future – for the Baby Boomers and beyond.

 

1 Johnson, Alan (December 2015) Homeless Baby Boomers: Housing poorer baby boomers in their retirement. Salvation Army Social Policy and Parliamentary Unit, Auckland. Hard copy and on line at http://www.salvationarmy.org.nz/socialpolicy

2 Nana, Ganesh, Stokes, Fiona, Keeling, Sally, Davey, Judith and Glasgow, Kathy (2008) Older Renters 1996-2051: Trends, Projections, Issues and Challenges. NZiRA and BERL.