Retiring at 73? The Superannuation Squeeze & Interest Rate Update | NZ Property Insights Episode 4

In this episode of New Zealand Property Insights, Paul and Debbie Roberts unpack the stark warnings from the recent New Zealand Economic Forum regarding the future of NZ Superannuation. With an aging population and changing economic data, relying solely on the government for retirement is becoming an increasingly risky strategy.

In this episode, Paul and Debbie cover:

• The Superannuation Squeeze: A breakdown of why the retirement age may need to rise to 72 or 73 for the country to afford the Superannuation Bill. The hosts discuss the dropping dependency ratio and the alarming fact that 40% of Kiwis reach age 65 with little to no private savings.
• Reserve Bank Outlook & Interest Rates: With the OCR sitting at 2.25%, the Reserve Bank has indicated that mortgage rates may only fall a further 20 to 30 basis points. Paul and Debbie discuss why 70% of borrowers are now choosing to fix their mortgages for at least one year and how to structure loans in a flat-to-rising market.
• MBIE Landlord Compliance Crackdown: A recent sweep of 53 student rentals in Dunedin resulted in 23 warnings and 12 improvement notices. Discover why taking a planned, preventative approach to maintenance and documenting everything is essential to protect your investment business.

Whether listeners are planning for retirement or looking to ensure their rental properties remain compliant, this episode cuts through the noise to provide actionable, factual insights.

Resource Links: 📅 Free Online Event: Learn how to succeed in any market cycle. Register for the next "How to Succeed with Property Investing" event here: https://www.propertyapprentice.co.nz/auckland-events/

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💻 Website: https://www.propertyapprentice.co.nz

Disclaimer: This information is general in nature and does not constitute personalised financial advice. Please consult with your own professional advisers before making any investment decisions.

Chapter Markers

01:51 The Savings Crisis: Why 40% reach 65 with no savings

06:37 Topic 2: Reserve Bank Outlook & Interest Rates 

08:34 Mortgage Fixing Trends: Why Kiwis are locking in rates 

10:37 Is it a good time to buy property right now? 

14:28 Topic 3: MBIE Compliance Crackdown on Landlords

Transcript

Paul: 0:00

Hi everyone. Welcome back to New Zealand Property Insights. I'm Paul Roberts. And I'm Debbie Roberts. We are the owners of Property Apprentice and we are here to help you navigate the New Zealand property market with facts, not just headlines. Today we're looking at a topic that you should be aware of. It's a massive wake up call for every working Kiwi. We're also discussing the stark warnings from the recent New Zealand Economic Forum and the reality that New Zealand's superannuation is becoming extremely unaffordable and what that means to retirement age.

Debbie: 0:30

We'll also be looking at the Reserve Bank's latest reality check on interest rates, and we've got an important warning for landlords following an MBIE compliance crackdown south down south. So we're starting today with a very sobering discussion that took place at the New Zealand Economic Forum at Waikato University, the superannuation squeeze: do you wanna work into your seventies? The core message was clear. If New Zealand wants to afford it, Superannuation Bill Kiwis might have to work well into their seventies.

Paul: 1:01

Now, this isn't just fearmongering or scaring people, it's basic maths. As our population is aging, the ratio of people, working and paying taxes to the people that are receiving the pension is dropping drastically. So the dependency ratio, Milford Investments CEO, highlighted that in the 1970s there were about seven workers for every person over 65 today, that is four to one. So gone down from seven to four. By 2060, it'll only be two workers supporting every retiree,

Debbie: 1:35

and that's not even taking into account anyone else who's on benefits, but the savings crisis, currently, 40% of retirees arrive at the age of 65 with little to no private savings, which means they're relying entirely on their income from New Zealand superannuation. Meanwhile, half of the current workforce is surviving paycheck-to-paycheck, so not much money left over to put towards savings. Milford CEO noted that treasury has been very clear: unless the retirement age rises to 72 or 73 from the current 65, the country simply can't afford the Superannuation Bill in its current form. Means testing is also being floated as an inevitable change.

Paul: 2:23

Adding fuel to the fire, New Zealand ranks 27th out of 37 OECD countries in productivity and 33rd in savings.

Debbie: 2:32

33rd out of 37.

Paul: 2:34

Yeah,

Debbie: 2:34

that's pretty grim, isn't it?

Paul: 2:35

And uh, ANZ Chief economists Sharon pointed out that the healthcare needs, uh of someone over 85 costs five times more than anyone over at sort of 65 years old. The article, is basically the mission statement that article is the mission statement for why Property Apprentice exists. For over 16 years, we have been saying that you cannot rely on the government to fund your lifestyle in retirement.

Debbie: 3:03

Absolutely. As a financial adviser when I do retirement plans for our clients, we never relied just on the pension or superannuation. The fact that 40% of people reach the age of 65 with no personal savings is heartbreaking. It's a reality that we have to address. If the government pushes up the age of eligibility to 70 or 72 or introduces strict means testing, what's your backup plan?

Paul: 3:33

And that's where property investment comes in. Like it. Or don't like it? I think it is a, it is absolutely the most important thing in the country because we provide so much of the rental stock the government could not do it. You don't buy real estate just to get rich quick. You buy it to get your time back. If you have a portfolio of properties generating passive income by the time you're 60, 65, it doesn't matter what the government does to the pension age. You dictate when you retire, not politicians.

Debbie: 4:04

Exactly. Now, former cabinet minister David Parker mentioned making KiwiSaver compulsory to match Australia, which is a good step, but it takes decades to compound. If you are in your forties or fifties. Right now, time is not on your side. You need to use the benefit of leverage and property investing allows you to use the bank's money to build an asset base that outpaces inflation over the long-term

Paul: 4:31

and provides homes for people that need them.

Debbie: 4:34

Absolutely. A third of our population in New Zealand live in rental properties and private landlords supply approximately 85%.

Paul: 4:43

What was it that if all landlords stopped, gave up property investing, it would be more than the entire country's GDP?

Debbie: 4:52

Yeah, and it was

Paul: 4:52

something that the government had to do it for everybody.

Debbie: 4:55

And if, um, and if only 10% of New Zealand landlords sold their rental properties and the government had to buy them. Yeah. To provide housing.

Paul: 5:05

Suck that up.

Debbie: 5:05

It would bankrupt the government.

Paul: 5:07

Yeah. So, right or wrong, it's a necessity and it's a great way to build wealth slowly over time if you know what you're doing. So the key takeaway is take control. Do not wait for a government policy to save you. If you wanna retire with dignity at an age where you can actually enjoy it, you need to start building your own safety net today. If you do nothing to improve your own financial future, you may get nothing. Then some people say, "oh, what if there's a change of government, or, what if there's a capital gains tax?" Or, what if? What if? What if people need to stop that. I would rather look after myself and my family and pay tax on any profit rather than have nothing because I did nothing. So forget about the what ifs. I think Kiwis forget how lucky they are living in New Zealand. We travel a lot and pretty much every country we go to is way more expensive than New Zealand. You need to make your own future.

Debbie: 6:04

Absolutely. And don't forget if the government does increase retirement age to help fund the superannuation, that could also mean an increase in the age that you'll be able to withdraw your Kiwisaver as well. So, you know, we could increase the age of eligibility to withdraw your Kiwisaver from 65 up to 70 or 72 as well, if that, you know, 'cause they probably line it up with the retirement age. So next segment is, we are gonna be looking at the Reserve Bank of New Zealand's outlook and whether or not we're at the bottom of the interest rate cycle. So moving from the long-term horizon to what's happening right now, the Reserve Bank has just released its latest outlook on house prices, interest rates, and the broader economy, and it includes a really interesting shift in how Kiwis are managing their mortgages. We've seen the official cash rate, the OCR, we've seen it drop significantly down to 2.25%. But if you're waiting for mortgage rates to return to the 2% levels, or two to 3% levels that we saw during COVID, the Reserve Bank

Paul: 7:13

yeah, not gonna see those again. The REINZ House Price Index has dropped to about 15% from its peak in 2021. However, Chief Economist Paul Conway stated house prices are still a little above what we consider to be sustainable, so modest growth is expected. The RBNZ expects house price to remain in check this year. High inventory and very cautious household spending are acting as a hand break on rapid growth, but I think that is starting to change as we move forward. There's definitely a lot more productivity. Companies are feeling a lot more happy to spend money and we are seeing people, the jobs, numbers, and applications for new jobs going, coming along really quickly.

Debbie: 8:01

Absolutely. We were at a conference yesterday and the statistics are really good as far as business confidence goes. So business confidence is the highest it's been for 10 years. I think it was 10 years. Yeah. Yeah. So, and, and confidence in housing is also significantly increased. So, yeah, so it's a good time in the market. Interest rate, reality check, the OCR currently sits at 2.25% as Paul mentioned earlier, and the average mortgage rate has fallen down to around about 5.1. Percent, but assistant governor, Karen Silk warned that mortgage rates might only fall a further 20 or 30 basis points at most. And to be honest, that's an "if" as well. My opinion is that there's potentially more chance of interest rates increasing than decreasing in the next few months. The Reserve Bank did a really good job of instilling confidence in the economy by indicating that they're not planning on increasing the interest rates or increasing the official cash rate until 2027, but that will depend on all of the data that comes in. Now, when it comes to interest rate re-fixing, here's the most telling statistic. The share of mortgage lending being fixed for at least one year, jumped from 40% in November. To 70% in December. Borrowers are anticipating that interest rates are likely to increase in the future, and in fact, there's a huge percentage of people who are now choosing the two-year rate to lock in those low interest rates. Before they increase further. Now close to 40% of all fixed mortgage lending is due to be refixed in the first half of 2026, which tells me that Kiwis have been doing pretty well with their decisions about what to do with their mortgages. Because if we can refix our mortgage and lock in some certainty, before interest rates start increasing again, then that helps manage the mortgage payments.

Paul: 10:08

And I was just checking our notes and it was actually business confidence is at a 30-year high as of December, 2025, average consumer confidence is the best we've seen for a very long time, and population growth is due to increase 1.7% every year up until 2030.

Debbie: 10:29

Mm-hmm.

Paul: 10:30

So we're 2026. If 5 million people, I can't remember the exact population we've got right now, but on 5 million people by 2030, that's another 400,000 people that we have to house and look after.

Debbie: 10:44

It was quite interesting yesterday, wasn't it? They certainly gave us the impression that if anything, we are likely to end up with a shortage of housing.

Paul: 10:53

Mm.

Debbie: 10:53

You know, rather than an oversupply of properties. So,

Paul: 10:57

yeah, I think

Debbie: 10:57

we'll be keeping a close eye on this. See

Paul: 10:59

things get gobbled up pretty soon. So let's unpack that word, "sustainable" when the RB NZ says price prices are still slightly above sustainable, they mean relative to income. So they don't necessarily want house prices to crash. Uh, they want right wage growth to catch up before we see another property boom. Debbie: Exactly. And that ties directly into their expectation of modest growth. We are in a flat to rising market, which is actually a fantastic environment for serious investors and first home buyers. Mm-hmm. This is the most affordable it's been for first home buyers since before COVID. So this is a really good time and interest rates are still below average as well. You're not competing when you're in, when you're a property investor. You're not, you're not competing with desperate FOMO buyers. You've got plenty of stock to choose from and you've got plenty of time to do proper due diligence as well. Yeah, and that's what we're seeing from a lot of our clients, is we can look at multiple properties and make sure the one that we're gonna buy is gonna be the one that fits your financial position. There is no silver bullet here. You've got to buy what fits your position, not just what someone's trying to sell you.

Debbie: 12:14

And same with first home buyers, you know, with so much choice in the market. I think, um, just as an aside, one of the things that we've seen recently was a survey from Trade Me, which showed that the majority of buyers in the current market are looking for properties that are fully renovated, don't need anything done to them, which, you know, that means that people who are looking for do-ups, they're not there at the moment. Whereas, you know, if you are looking at a property and you can negotiate on the purchase price 'cause there's not much interest in that type of property, and then add value to it, that's great. Yeah. Just if you're a first home buyer, you need to be aware of the fact that if it's major renovations, the banks can look at that, in a negative point for you. But if it's cosmetic, piece of cake

Paul: 13:01

mm-hmm. So what caught my eye was the massive shift in how people are fixing their mortgages. Jumping from 40 to 70% of people locking in for a year or more. Shows that the market believes the rate cuts are basically over, which we agree as well.

Debbie: 13:17

As a financial advisor, I'm constantly having these sort of conversations with clients. If the assistant governor of the Reserve Bank is publicly saying that rates might only drop another 0.2 or 0.3%. If at all, the wait and see approach is effectively dead. If a deal stacks up today at 5.1% interest rates, buy it. Don't risk missing out on a great property for the sake of saving a fraction of a percent on interest costs. And with 40% of the country due to refix in the first half of this year, this is the perfect time to review your mortgage structure. Don't just auto renew on your banking app. Look at splitting your mortgage across a one-year and a two-year term, potentially even longer term, depending on your situation. To help hedge against any future rate volatility. I'd also suggest that you have a chat with your mortgage adviser because all banks are different and some banks might be better suited for you than others. So if you're in a position that you could potentially refinance to another bank, that's gonna be good for you. All right, so last but not least, we're gonna look at a recent compliance sweep that serves as a massive warning for landlords across the country. The MBIE crackdown are your rentals compliant MBS Tenancy Compliance and Investigations team, also known as TCIT, has been inspecting student rentals in Dunedin, and the results show exactly why a set and forget mentality doesn't work anymore.

Paul: 14:47

That's right. While majority of landlords want to do the right thing, the sheer number of warnings issued proves that many are still falling behind on the basic maintenance and legal requirements. The sweep that the TCIT did, checked 53 student rental properties in Dunedin. Uh. Good place to start. The results outta those 53, they issued 23 warnings and 12 improvement notices. The culprits, the issues were largely preventable. They ranged from missing healthy homes compliance statements, broken heaters, faulty extractor fans, dead smoke alarm.

But the solution: 15:22

MBIE explicitly stated that taking a planned preventative approach reduce risks and saves money and the top tips are to ensure your healthy homes compliance before day one of the tenancy, regular maintenance, preventative maintenance, like cleaning, gutters, et cetera. And, document absolutely everything in writing.

Debbie: 15:45

Yeah, absolutely. This comes back to what we always teach at Property Apprentice: property investing's a business. You wouldn't run a cafe with a broken oven and expect customers not to complain, and you shouldn't run a rental property with a broken heat pump. You know, this is part of your responsibility as a landlord.

Paul: 16:03

Hmm. And I think, you know, a lot of people I talk to, they go, oh, well I just want the easy way. I'll just buy this because it's new. Or someone's selling me the dream. If you are spending $500,000, $800,000 on a property as an investment. Think of it like you're buying a business at 500 or $800,000. Then it puts a different spin on it because you wouldn't just go out and buy a business from Joe Bloggs and go, oh, sweet. I'm sure it'll be fine. You would spend hours and talk to accountants and go through the profit and loss, and you'd make sure that it was the right business for your financial position. You need to do that with property investing.

Debbie: 16:43

Buying a property is the easiest part. Yeah. Of property investing. It's everything that happens afterwards.

Paul: 16:49

Yeah. Keeping it for 10 years, that's the hard part.

Debbie: 16:52

Exactly.

Paul: 16:53

So, uh, trying to bring this back to their previous segment on interest rates. If your cash flow is already tight and your, because you'll fix it at 5.1%, you cannot afford a massive fine from Tenancy Tribunal or have your rent paused because the property is deemed unlawful. A proactive gutter clean might save you five grand's worth of water damage.

Debbie: 17:14

And let's talk about documentation. MBIE's advice to document everything is critical. If a tenant breaks something or if you agree to fix an issue by a certain date, put it in writing. Keep copies of your healthy home certificates and your pre-tenancy inspection photos. When TCIT knocks on your door, having a paper trail is your best defense.

Paul: 17:35

The days of our slum landlords are over. Tenants know their rights and the government teams are actively enforcing the law, which they should do. Treat your tenants with respect. They are your clients. They're not your tenants. Provide a safe, warm home and the returns will follow. So that wraps up, episode four of NZ Property Insights. We've covered a lot today. The Scary Reality of the superannuation age rising, Reserve Bank interest rate reality check and the importance of keeping your properties compliant.

Debbie: 18:08

If this episode made you realize that you need a better, long-term plan for your retirement, or if you wanna learn how to buy properties that actually stack up in today's interest rate environment, we'd love to help you on your journey.

Paul: 18:20

Pretty much every week we run a free event online called How to Succeed With Property Investing. It's a invaluable session where we go much deeper into how to structure your portfolio, manage risks, get started, how to do things right, and prepare for your future.

Debbie: 18:36

Absolutely, and it's completely free. No obligation. So jump online and join me at one of those free events. Ask me as many questions as you like, and I will answer as many as I can in the time permitting. So you can find the links to register for those events either in the show notes or go to www.propertyapprentice.co.nz.

Paul: 18:56

Thanks guys.

Debbie: 18:57

See you next time.

Paul: 18:58

Bye.