Asset-rich, cash-poor retirees selling homes
Warning to those considering using sale proceeds to hit the road
Many retirees have a million-dollar asset thanks to the property boom but little cash to enjoy their retirement. Now some are selling their home and hitting the road. However, experts are urging caution. Carmen Hall reports.
Some asset-rich cash-poor retirees are selling up and choosing to rent or move into motorhomes to free up money, a rental agency boss says.
Tauranga Rentals director Dan Lusby said many people were finding it tough to make the most of their retirement because they had limited money coming in despite living in a million-dollar home thanks to the property boom.
As of February 2024, the median house price in Bay of Plenty was $820,000, up from $385,000 10 years earlier and meaning the median Bay property increased in value by 7.85 per cent each year, or $43,500 on average.
As a result, some retirees were choosing to sell so they could help their children gather a deposit for a house.
Others were selling, putting the money in the bank and using the interest to travel or buy a campervan and “live life”.
But the head of the New Zealand Motor Caravan Association urges retirees not to leap in and sell all their property holdings so they can drive off into the sunset.
Rapson Loans and Finance co-owner Tristan Hewett said a small number of superannuitants had sought advice about selling assets to free up money.
“It is really tough when the only option left is to sell or to downsize.”
He said a few clients still had debt when they reached 65 but many were working later in life to pay their mortgages.
“Older people do have the option to downsize their houses and move to a cheaper area to enable them to reduce or repay their lending that way.”
Reynolds said one option for people who were asset-rich but cashpoor was to downsize and reduce debts with the money from the sale.
“There is also the option of a reverse mortgage but there are quite strict parameters around that.”
Having a home provides security
New Zealand Motor Caravan Association chief executive Bruce Lochore said people often reviewed their assets, including property, when they retired.
Some downsized for convenience and might buy a motorhome or caravan. Others sold everything to live on the road but he urged people to not leap in.
“We absolutely don’t recommend they get out of the property market. It’s great for a while and, you know, they may do it for five or 10 years.
“We see time and time again, people who have left the property market, all they’ve got is their motor home, and it doesn’t fit with their health issues at a later stage.”
Carrie Abbott, from irent Property in Rotorua, said some h retirees had bought motorhomes and spent months travelling the country.
“But they typically rent their properties out while they are away rather than sell up.”
‘What’s the point of working and not being able to enjoy it?’
Tremains Bay of Plenty managing director Anton Jones said retirees