The $1.4 trillion housing problem no one is solving
New Zealand's over-55 homeowners collectively control approximately $1.4 trillion in household wealth — and new research from Squirrel Property Finance suggests a substantial portion of it is sitting idle, not because people don't want to move, but because the housing available to them fails to clear the emotional bar required to make a move feel worthwhile.
The research, commissioned by Squirrel and conducted by market research agency TRA across 510 homeowners aged 55+ and three qualitative focus groups, reveals a striking intention-action gap. While 89% of respondents said they would consider downsizing, only 19% are actively in the market. A further 46% are passively open to moving, and four in 10 of those who have no current intention to move expect to remain in homes that will no longer suit their needs as they age.
The research found that downsizing typically happens reactively rather than by choice — 90% of those who had already downsized attributed the move to a major life event such as retirement, a health change, or a shift in family circumstances, rather than a proactive housing decision. Inertia, the research concluded, is the real barrier — not lack of awareness of the practical benefits.
The timing is significant — the housing market is already softening, with the REINZ HPI declining 0.4% month-on-month and 0.9% over the year in April, sales volumes down 7.9% annually to 6,262 transactions, and inventory sitting near multi-year highs at 37,334 listings.
The product is failing the buyer
The research identifies a consistent disconnect between what the market is building and what downsizers actually want.
Participants across both quantitative and qualitative phases described current downsizer stock as visually repetitive, overly dense, insufficiently private, and designed more for feasibility efficiency than liveability. Only 9% identified off-plan homes as their preferred option, with concerns around quality, delays, and financial exposure all compounding the trust deficit.
Squirrel founder John Bolton (pictured) says the threshold for conversion is fundamentally higher for this cohort than for first-home buyers.
"For first home buyers, if a property isn't quite right, it's just a step on the ladder — you can always move on. Downsizers don't feel like they have time to undo bad decisions, and they don't want the hassle anyway," Bolton said.
On the physical product itself, the findings are unambiguous. A garage is a non-negotiable for 98% of respondents. Single-level living is the strong preference of 94%. Two-thirds want a spare room, and 63% want two bathrooms. These are not luxury requirements — they reflect a desire to simplify life without shrinking it.
"They want to downsize on hassle, not their lives," Bolton said.
What this means for the housing market — and mortgage advisers
For mortgage advisers, the research points to a cohort that is equity-rich but conversion-resistant — and whose reluctance is not primarily financial. Bolton noted that the research challenged a common assumption about this demographic: many are willing to pay the same or more for a home that genuinely meets their needs, prioritising quality and location over releasing equity.
Registered Master Builders CEO Ankit Sharma framed the opportunity in generational terms, noting that shifting demographics and climate-related insurance pressures will eventually push more Kiwis toward higher-density housing — but that a change in product design will need to accompany that shift.
"For this demographic, it actually isn't about downsizing, it's about life-sizing. People want better lifestyles — and right now that means space. Flexible space," Sharma said.
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