Retirement Life
15 July 2026
What the decline of the ‘mum and dad’ property investor means for retirement
For decades, buying a residential property or two has been a bedrock of retirement planning for New Zealand’s ‘mum and dad’ investors. But what happens when the property numbers stop stacking up?
The tectonic plates that underpin the New Zealand property market appear to be shifting. And the change looks structural – meaning the long-held confidence that property could be the main asset to fund a comfortable retirement upon is coming into question.
Michael Rehm, Associate Professor in Property at the University of Auckland, Waipapa Taumata Rau, says that since around 2021, the housing market has entered a very different phase.
Instead of rapid growth in property values, it’s seen five years of a “gradual slide to treading water” phase. Even where house prices are stable, inflation has eaten into values.
For those investors who bought earlier on – particularly in the 1980s or 1990s – there is still a financial cushion to fall back on, Rehm says. But for newer investors, the reality is different. Buying property over the last two decades has increasingly meant “gambling” on the idea house prices would continue to outpace incomes, he says. That prospect now appears less certain than it once did.
Earlier this year, economist Tony Alexander produced a list of 16 reasons why the rush of average mum-and-dad investors into housing – which he says started in the mid-1990s – was easing off.
He surveyed 200 mum-and-dad landlords, finding that a record number (38 per cent) planned to sell, and relatively few (12 per cent) were seeking to buy.
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Values down, costs up
At the same time as property values have hit bumpy waters, rising insurance costs, rates, and maintenance costs are all eating into that important rental return. And it has become harder to get the funding needed from banks to invest, as debt-to-income and loan-to-value ratios have become stricter. What’s more, borrowing costs are up too.
Rehm says some investors are having to top up their mortgage payments with other income to keep their investments afloat, and over time that becomes unsustainable.
The challenge for retirees
It’s important to remember that property is illiquid – meaning it can’t be easily converted to cash and takes time. And for those near, or in, retirement, that can be difficult if they suddenly need the money for something like a hip replacement.
There are other downsides to property investment as the main form, or key supplementary income, in retirement – the effort and risk involved. Retirees can find it a tie administering investment properties – paying more than one set of council rates, looking after multiple sets of lawns and covering maintenance of multiple roofs when they want to be focusing on enjoying their lives. And then there can be periods of vacancy affecting returns.
“If you want to get that cash and be able to go into the retirement village or do whatever you want to do – take those trips or make use of your youth while you have your relative youth, you have to sell.”
—Michael Rehm, Associate Professor in Property at the University of Auckland, Waipapa Taumata Rau
How long could this phase last?
Rehm says that if house prices tread water for six or seven years, there will come a tipping point at which many investors – especially older ones – will need to access the money in their properties and will want to sell. Even if that means getting less capital gain than they had hoped for and despite having held on to try and get those gains.
“It's a bit of a stalemate,” Rehm says.
“If this continues for much longer, my guess is, because of the demographic of a lot of the investors, they are going to want to sell; they're going to have to sell.
“If you want to get that cash and be able to go into the retirement village or do whatever you want to do – take those trips or make use of your youth while you have your relative youth, you have to sell.”
And this may well cause prices to slide further – which will feed more selling, Rehm says.
“It's the polar opposite of the whole fear of missing out on the upside. It's the fear of missing out on capital gains on the downside.”
Where to invest instead?
If “mum and dad” investors largely exit the market –or fail to achieve the capital gains they expected the retirement landscape will shift. People are likely to rely more heavily on diversified investments rather than on a single asset class like property.
There are already signs this is underway. Younger generations are focusing on alternatives like KiwiSaver and share investing. Some are questioning whether taking on large mortgages is still worth the risk, and there are news stories comparing property gains with those in the share market, with property looking lacklustre.
While the ‘mum and dad’ investor may not disappear entirely, Rehm believes the Kiwi mindset about property is changing.
It’s likely to be no longer seen as a guaranteed path to wealth – but just one of the building blocks amongst others, rather than the foundation itself.
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Written by:
Sonia Speedy
Sonia Speedy has been a journalist for over 20 years, working in newspapers, magazines and radio. She also runs an online platform for parents at familytimes.co.nz. She lives on the Kāpiti Coast with her young family and loves writing stories that help make people's lives easier.
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