Tauranga: The city of the future

Jenée Tibshraeny discusses why New Zealand's retirement capital is a blueprint for the rest of the country

15th Jan 16, 11:34am by Jenée Tibshraeny

By Jenée Tibshraeny

“Oh you’re from Tauranga – my grandparents live in Tauranga.”

This is the response I have become used to receiving from people who ask me where I grew up.

I have nothing against people whose grandparents live in Tauranga – it’s a cracker of a place after all. But let’s be honest, having your hometown perceived as the country’s “Retirement Capital” doesn’t make it sound terribly enthralling.

Yes, there’s something about every New Zealand town or city that evokes a less than ideal stereotype – Palmy is supposedly full of Bogans, Auckland overflowing with JAFAs, and Christchurch full of people defined by the school they attended. But I’ve always wished people associated Tauranga with the beaches and sunshine I associate it with.

This was until I went back home during the Christmas break.

Retirement village building boom

Seeing the paddocks in the Bethlehem area I grew up in transformed into luxury retirement villages, it hit me; Tauranga is no longer just a desirable place to retire, it’s a haven for the retired.

While retiring baby-boomers cashing in on their Remuera houses and heading south, isn’t exactly breaking news, the scale of development in the retirement village sector within the last few years is striking.

I spotted five retirement villages in the suburb of Bethlehem alone, four of which have only been open since 2010. There are at least another two either planned or in construction.

Looking beyond Bethlehem, Statistics New Zealand earlier this week attributed the fact the number of new dwellings consented reached a 10-year high in November, to there being a spike in consents for retirement village units.

The number of building consents granted for retirement village units hit 2,086 in the year to November 2015 – a 22% increase from the previous year, and a 134% increase from 2010.

A whitepaper prepared by Jones Lang LaSalle (JLL) in December last year, ‘New Zealand Retirement Village Database’, reveals 4,500 new retirement units have been built since 2012, increasing the stock by 21% to 26,307.

The report writer, economist and research consultant Angela Webster, says about 2,000 of these 4,500 units have met demand generated by our aging population, with the remainder fulfilling demand from a higher portion of elderly people moving into retirement homes.

Tauranga a blueprint for the rest of NZ

Looking at these figures, it’s clear my observations in Tauranga reflect what’s to come for the rest of the country as our population ages.

While Tauranga’s sunshine and coastal location means it may always be the country’s retirement capital, plans to house and care for retiring baby-boomers are in full swing around the country.

In 20 years’ time, most of New Zealand may look like what Tauranga does now – a retirement haven.

Webster notes that at 18%, the Bay of Plenty is the region that has the country’s highest portion of people aged over 75, who live in retirement villages.

Yet Auckland is catching up, with 15% of over 75s living in retirement homes.

What’s more, there’s so much more retirement village development planned for Auckland, Webster expects the region’s penetration rate to keep increasing.

She says around 49% of the country’s retirement village development currently in the pipeline is expected to take place in Auckland, while 13% is expected to take place in Canterbury and only 8% in the Bay of Plenty.

A total of around 16,000 new units are either being planned or constructed at the moment, meaning New Zealand’s existing stock of retirement units is expected to increase by 62% within the next three to five years.

The executive director of the Retirement Village Association John Collyns, believes a total of 53,200 new units will need to be built by 2038 to meet the demand.

At an average village size of 150 units, that’s 17 new villages every year between now and 2038.

Collyns makes this forecast in the JLL report based on population demographic stats, as well as the assumption the national penetration rate for over 75s will increase from where it is now at 12%, to 14%. It’s already increased from 9% in 2012.

Retirement village boom soothes Auckland housing shortage… for now

Looking at the issue from a wider angle, Webster says an increase in retirement villages can help solve some of our housing market issues.

She says having more retirement villages frees up family homes within suburbs, which already have established schools, transport links, recreation facilities, etc.

It also contributes to residential intensification, which reduces urban sprawl.

Yet Webster warns there’s an over-supply risk, particularly in Auckland where larger village operators are land banking and planning big developments.

Going back to Bethlehem, I can see why penetration rates across the country – and particularly in Tauranga – are so high at the moment.

A number of the new units being built are large three-bedroom luxury homes, with decent-sized gardens that give the village a country club feel.

The emergence of these sorts of villages indicates there’s a demand from younger, more able-bodied retirees, to move into these facilities.

In fact, Freedom Villages, a new “lifestyle and retirement” complex in the Tauranga suburb of Papamoa, promotes itself saying:

“We make it possible for active baby boomers to live in a modern and affordable house in a premium resort-style location, while still retaining the financial freedom to travel and enjoy your chosen lifestyle in the way you've always wanted…

“It’s the perfect option for the 50-plus generation who want to downsize to free up cash and turn dreams of travel and adventure into a reality.”

New Zealand a retirement haven of the world

I believe Auckland’s heated housing market is incentivising retiring baby-boomers to sell their family homes, take the cash, and run to a “lifestyle and retirement” village earlier than they may otherwise have done.

This is all fine and well, but I note Webster’s warning of an over-supply risk.

If the Auckland housing market takes a turn, less people will be able to afford to move into retirement villages, and we’ll be stuck with a number desolate mini retirement neighbourhoods.

If I was certain about what was going to happen to the Auckland housing market, I’d probably be retired myself and writing about my riches from exotic locations around the world.

But I’m not… so what I can conclude is that whether or not the housing bubble pops, the face of New Zealand is changing.

Soon Tauranga won’t stand out as a retirement town, but New Zealand will be one of the retirement havens of the world.

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33 Comments

by Afewknowthetruth | 15th Jan 16, 12:28pm 1452814112

'In 20 years’ time, most of New Zealand may look like what Tauranga does now – a retirement haven.'

That must rate as one of the silliest statements of 2016.

"The next 20 years will be nothing like the past 20 years."

http://www.peakprosperity.com/crashcourse

'The Crash Course has provided millions of viewers with the context for the massive changes now underway, as economic growth as we've known it is ending due to depleting resources.'

by dictator | 15th Jan 16, 12:45pm 1452815100

Oversupply isn't going to be a problem until the retiree population goes into decline in about 28+ years. No doubt there will be oversupply of every type of building at that point.

by xingmowang | 15th Jan 16, 1:35pm 1452818118

And so much can happen in this time span of nearly 30 yrs.

Just compare whatever now with whatever in 1986.

by richking | 15th Jan 16, 1:45pm 1452818730

Everyone knows the city of the future is the Tron....

by sharetrader | 15th Jan 16, 2:15pm 1452820500

LOL, hopefully they will get the motorway finished soon so you can go around it

by ngakonui gold | 16th Jan 16, 10:49am 1452894543

The growth in crime and no go areas in Hamilton would indicate that you are correct.

by Chris-M | 15th Jan 16, 1:51pm 1452819074

According to a couple of house building companies that I spoke to at the end of last year there is a shortage of suitable land available in Tauranga. Much of what is advertised will not be available for at least a year. As with Auckland, the local council appears to be engineering an artificially constrained market. How can we get rid of these crooks.

by sharetrader | 15th Jan 16, 2:12pm 1452820352

with a high number of retires WP should stand there again could give national a run for it

by redcows1 | 15th Jan 16, 2:15pm 1452820548

I grew up in Te Puna in the 70s. Tauranga sucked then and it sucks even more now. Impossible for young people to move around on the poor infrastructure and poor public transport let alone for old people. My parents moved over the Kaimai to Matamata to retire. Flat easy accessibility alround great close knit community.
All those whinny old people with nothing to do because no one wants to see fatalities built because they're all nimbies.
Best thing about auranga is it keeps them all in one place.

by Spinach | 15th Jan 16, 2:28pm 1452821333

Fatalities!!!!!!! yoicks!

by two otherguys | 17th Jan 16, 9:01am 1452974495

Only horses "whinny"
They shoot horses don't they?
http://www.imdb.com/title/tt0065088/

by muntijaqi | 16th Jan 16, 9:56pm 1452934605

Tauranga is by far the best place to live in NZ in my opinion, not only for retired people but also for young people and families. And I've lived in different places for years including Auckland, Invercargill, Central Otago and now Mt Maunganui.

by Baza-b1 | 17th Jan 16, 4:15pm 1453000536

The Aucklanders pushing into Tauranga chasing yield and lack of 30% LVR are distorting the property prices here. Its having a ridiculous effect on housing prices. My Wife and I are looking at buying into our first home; weare qualified in science disciplines both working for local industry and yet we are struggling to find a half decent house that we can raise a family in. When i mean half decent im talking 150 squares house on 500 squares in the likes of very periphery tauranga like Welcome Bay etc. Anything in the 350 to 450 mark is absolute crap. Some of the second hand houses the RA are pushing is beyond shameful. Ive got to the point of nutting off telling them what they are listing is absolute sh!+. When was it ever OK to be spending over half a million for a half decent first home... This is crazy.

I caught up with a mate of mine from our primary school days who i hadnt seen in 5 years; he had just had his first baby with his wife and looking to get into their first house. For the life of him, based on his savings and his "Australian savings" and "tauranga single income" there was just no way he was getting into a house locally. He asked me outright, dont you think its wrong when you cant even afford a house in your own hometown when your earning more than the average Joe. I shook my head; its so hard seeing so many outside investors coming down here and over inflating the market.

I will say this much we are lucky enough to have a cheap 2 bedroom double garage flat 150m from one of the best local beach breaks for $320. We only have that because our landlord is local surfer who has been here for years and knows what struggles the native population is going through.

These macro-prudential tools set by the RBNZ and GVT are only shifting the problem to the regions. Great for those on the ladder and those scalping the system (RA) but for the young working professional we are getting screwed. Employers here also use the location and lifestyle as a reason as to why they will pay less too, supposedly its a privilege. So its a double edged sword... Very interested to watch wage growth vs rents change in the coming years as more AKLD money comes in.

Sorry for the rant...Just spent another Sunday in the crowded halls of open homes with Auckland investors....

by rastus1 | 17th Jan 16, 6:28pm 1453008522

...the question has got to be when will the opposition parties pick up on this shambles. Govt Key is the epitome of hopeless, but yet the masses remain transfixed. The stategy seems to be force our own to look elsewhere, replace them with foreigners who are happy to live 3 families to a room!

by Grant A | 17th Jan 16, 6:38pm 1453009101

Democracy sucks doesn't it rastus

by rastus1 | 17th Jan 16, 6:46pm 1453009565

Not at all. But I do recall the days the local MP was answerable and part of the community. When did you last engage with your local MP? When did you you feel they actually represented your community? When did you last see an MP grilled on main stream TV at prime time and called to account? Democracy has been hijacked.

by Grant A | 17th Jan 16, 11:45pm 1453027503

Current affairs can't get prime time ratings rastus which says an awful lot about the public and whats important to them

by profile | 18th Jan 16, 6:06pm 1453093576

"...answerable and part of the community." - until MMP came in, and with it, surprise, surprise, a swathe of party list hacks answerable to no one.

by surfisup | 19th Jan 16, 3:54pm 1453172047

Sorry to hear about your difficulties, it really does get to a point where you start to lose hope too. I worry about my kids being able to ever afford a house. Capital is ending up in the hands of fewer and fewer people... just the other day was a story saying 62 people control half the worlds wealth. I'm 43 and I've never seen such desperation among first time house buyers. I bought in the 90's and thought it was relatively easy -- sure, I was on a good income but paid off a house in auckland in less than 5 years between the 2 of us but that house on mt eden border only cost use 270k. Easy peasy back then.

by rastus1 | 19th Jan 16, 5:45pm 1453178706

It is indeed the young I worry about. Keys is doing them no favours. Never mind, all is well as max key is all cool on social media, book face and tweeter...

by O.Farr-Kinnell | 19th Jan 16, 7:31pm 1453185076

I thought he'd been twatting and tweeting on face-plant.

by Jonty | 17th Jan 16, 9:28pm 1453019290

We got priced out of the Tauranga market also, and shifted to Rotorua as our jobs were here. However, we have found the Rotorua property market is no different, little boxes of houses that need work selling for way too much. We also found while attending open homes there would be hordes of Aucklanders looking through for Rental investments paying the asking price what seemed like on the spot.. It's hard to compete with that, you would find a house you could work with (not perfect) but something you could live in and the
property would be gone by Monday. We also found that when the real estate agents found out these people were from Auckland they would drop all conversation with us and totally be all over the Aucklanders. I have not read a lot about how the Auckland housing market and the flow on effect is now effecting locals further down the country, making it extremely hard for first time buyers in their own home towns.. Literally pricing locals out of the market.

by Belle | 18th Jan 16, 1:22pm 1453076561

Fools. I have a good friend who lost it all buying a rental in Rotas. It went something like this. I think he paid about $145k in 2007, sold out about 2013 for $65k after doing it up, getn it wrecked. Doing it up, getting it wrecked. Regular unpaid rental. So he has bank loan for 80k and no house. Rotas isnt for the faint hearted.

by bigblue | 17th Jan 16, 11:41pm 1453027315

Aucklanders moaned for two years about the Asian invasion and its impact on prices - now those in Tauranga, Rotorua and Hamilton are moaning about the Jafa invasion. Wanna do something about it - have a march in Tauranga protesting about the Jafas and the government who by installing a 30% deposit requirement onto Auckland have simply pushed the investors into the provincial regions. watch out Palmerston Nth, Hawkes Bay and Wellington - you are next on the radar. As mentioned above get onto your local MP, the media etc and make some noise. Get in touch with John Campbell.

by Jonty | 18th Jan 16, 8:19am 1453058386

You are so correct, I completely agree with your reply. My biggest frustration is that nothing is mentioned of the flow on effect. I understand wanting to invest in property (in the right market for you dollar) I also understand why Aucklanders are looking down the line to purchase. It's the lack of coverage and comment and silence about the impact on other towns and cities from this mass movement. Will be contacting my local paper.. I'm ready to talk!

by sharetrader | 18th Jan 16, 5:18pm 1453090711

a lot of young born and bred aucklanders are looking to move out of auckland to be able to have the kiwi dream of owning a home.

by O.Farr-Kinnell | 19th Jan 16, 7:56pm 1453186560

Yes, it is frustrating, but it was talked about. It is called the "ripple effect". And yes, I have watched it in awe. The animals are out of the cage. :(

by iconoclast | 19th Jan 16, 8:27pm 1453188433

yawn ... It's called a case of the "slows"

The ripple effect .. the domino effect

It's been happening for a long time ... I tried to tell them 5 years ago it "WAS" happening .. not a prediction that it was going to happen .. but WAS happening already

Now, suddenly, people are beginning to sit up and take notice .... bit late

See it here from 2011
http://www.interest.co.nz/node/52033/rural%20news#comment-599029

by Carlos67 | 18th Jan 16, 11:29am 1453069746

Probably wouldn't bother with Tauranga, just spent 4 days is a batch just 50m from the beach at Papamoa, now THATS somewhere I could quit work and move to from Auckland. Sun, surf and sand, what a great escape from Auckland destination.

by Alter Ego | 18th Jan 16, 12:26pm 1453073186

And might I just note. about that..it floods periodically and very prone to a Tsunami and earthquakes, as is the whole coast line.

Plus.

If sea levels rise, it would take the Great Wall of China to keep out the hordes and waves of unwanted attention to minor details. Out of the frying pan, into the ...mire.

It is also all built on sand...remind me ...what happened to half of Christchurch...if any of these events occurred. The Old Shaky Isles are all accident prone....but look the picture. Something to think about..Maybe?

by kiwimm | 18th Jan 16, 2:51pm 1453081885

On a technical point - free-draining sand performed extremely well in the earthquake in Chch. Waterlogged silt was the big problem. If you look at Waimairi Beach and compare it to Parklands next door the difference is stark - Waimairi on sand had next to no damage and Parklands had major liquefaction and ground displacement

by Baza-b1 | 18th Jan 16, 5:19pm 1453090769

Technically the area around Papamoa consists from anything from peats and silts through to dune sands and marine sediments. It totally depends on location. Its quite a geophysically complex area with multiple substrate types. Not withstanding the remnants of an old barrier-bar wetland that is now the main drainage that runs parallel to the main foredune. As one moves west towards Papamoa hills these substrate types become even further complex with peat, tephra and silts which pose their own geotechnical difficulties. There is a reason why the foam overpass was built on the new expressway. It literally floats on the peat. As papamoa expands it will be interesting to see what they do with westward land areas that no longer sit on the dune system. Currently much of the development sits on the main dune sand that is extremely well draining, but most houses are no higher than about 0.5-2m above water level. Many properties that have boundaries along this wetland and low areas frequently flood during storm events. As to how it holds up to a under a earthquake it would be interesting to see, I certainly couldnt say unlike some with any degree of certainty that anywhere with sand would be fine. I think the prevailing area has a lot to do with how it will react. I am not as concerned about the earthquakes as I am with sea level rise and the setback zones and potential insurance headaches many may face in years to come…

by waymad | 18th Jan 16, 5:30pm 1453091434

Excellent point, kiwimm. As a Waimairi Beach local, with a conventional slab-on-grade house with a heavy Monier tile roof, sat on wave-packed sand, I reported then about the lack of damage here. http://waymad.blogspot.co.nz/2010/09/rock-and-roll-by-sea.html So can personally attest to the YMMV stories - MSM generalisations like 'quake-ravaged Eastern Christchurch' have always amused me no end.

The February quake also causes no issues with the house (but concrete paths and driveway pad heaved and cracked a few mm, still zero liquefaction, now replaced).

Like politics, earth movements are 'always local'.....