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Taupō Retirement Dreams Rocky As Rising Rates Force Mum and Dad Investors To Sell

Retirement plans are being impacted by declining property prices and increasing interest rates as ‘mum and dad’ property investors in Taupō are being forced to sell nest egg homes decades early.

Property has long been considered a key part of financial planning, with ‘mum and dad’ investors purchasing a single house to help fund their retirement. However, the current economic conditions are wreaking havoc on retirement plans, with some owners needing to sell 10 to 15 years earlier than originally intended.

Taupō Tall Poppy Business Partner Tristy Vadnjal says she is seeing an increase in the number of investors who purchased a property in the region as part of their retirement planning, who are now having to sell as financial pressures continue to take their toll.

“We have people from Auckland, Wellington and Hamilton who have purchased rentals in Taupō with a view to eventually moving here and it becoming their forever home when they retire.

“However, every time there’s a jump in the OCR, we see more people choosing to sell because they can’t keep up with the mounting financial pressures. Last year, we would typically see two to four houses a week listed for sale across Taupō, but now it is closer to five to seven, including those who had invested in Taupō for their future,” says Tristy.

The latest REINZ figures show the median property value in Taupō dropped 11.8 per cent. While the type of properties owned by ‘mum and dad’ investors are often in the first home buyer bracket - $600,000 to $650,000 - Tristy says offers frequently fall through due to finance requirements.

“Banks are recalculating or completely withdrawing finance approvals. We have buyers who complete all of their due diligence, and when they go back to the bank are being told they can no longer borrow to the same level they had previously been approved for. Things like maintenance and repair costs are also being factored into borrowing, and we’ve seen a few offers fall through because of that.

“Our rental market is also being impacted as a knock-on effect; there’s a shortage of homes, and people are now resorting to renting out single rooms in their family homes to make ends meet and provide accommodation.

However, Tristy says that despite recent challenges, the market is starting to show signs of positivity, with some buyers stepping forward with renewed enthusiasm and confidence, especially if they have their hearts set on Taupō.

“After a long period of financial hardships, we are starting to see some signs of the sunshine of hope,” she says.

REINZ insights show that while there have been knock-on effects driven by circumstances such as the damage from Cyclone Gabrielle, the region is now seeing a return of potential buyers coming to the area - drawn by opportunities and events such as the recent Taupō Ironman.