Tuesday, January 10, 2012

Ageing in the City

Ageing in the CBD
In responding to my doubts about the employment assumptions behind Auckland’s plans for a new central rail link and what this means for the CBD, Patrick R cited the example of his 84 year old grandmother who enjoys the CBD lifestyle.  Dan talked about the attractions of town centres in Europe where many older people hang out.
If people are attracted to the CBD for its amenities and lifestyle as they are saying, I am not sure of the relevance of the rail link. But I take their wider point: don’t underestimate the attraction of CBD living, and let’s make sure we make Auckland’s CBD attractive.
Interestingly, the European city argument is most relevant because it refers to people ageing in place.  Many of the people Dan observed in Sardinia (and, indeed most other European towns) are likely to have always lived in and around the centre. 
Seeking a balance
Patrick’s observations about diversity of ages in the CBD are important because they highlight a key planning issue in Auckland, and elsewhere.  How to plan for an ageing population, particularly if reduced residential mobility is a feature of ageing?  I agree with Patrick that we are not talking about an “either-or “ situation here, and that our interest in the well-being of the majority should not blind us to the interests and needs of the minority.
There are plenty of people who will move into the centre in new world cities given the chance, making the most of the revival in street life, the performing arts, cafes and restaurants.  This is a reflection of a growing capacity in post-industrial cities for people to exercise choice about lifestyle and where they will live.  But it’s only part of the story. 
Living in the suburbs
The facts and figures I have cited in other postings indicate that the amenities associated with the CBD are also a growing part of the suburban story, a part that justifies greater attention and perhaps greater favour.[1] 
Suburban centres are becoming more like village centres.  This is entrenched in Europe.  Even in large cities like Paris and London the vast majority of people do not live in the centre, but live suburban lives focused on urban centres and urban villages.  The localisation of amenity and living is reflected in a more intimate system of local government than we are used to, though.  Perhaps one of our problems is having a single super city trying to plan for a diverse region.  But that’s another story.
The New Zealand evidence confirms that people here prefer to age where they have their roots, which is overwhelmingly in the suburbs. [2] This is where they have their financial, social and emotional investment. Even moving out of an outsized family home is a wrench.
The Data
So where might older people prefer to live?  I thought it would be useful to map their living preferences.  So I did this for Auckland using the 1996 and 2006 Censuses, assuming (rather unfairly perhaps) that age 50 qualifies you as an older person.  
I divided Auckland into several zones – the CBD; the inner Isthmus suburbs, (Westmere, through Kingsland, to Newmarket and Parnell); the balance of the Isthmus ; and the suburbs of the north, south, and west.  Among the latter I separated those closest to the CBD – Northcote and Takapuna areas further south on the North Shore; New Lynn in West Auckland; and Otahuhu through to Mangere and areas north in South Auckland. 
The figures tell the story.  The upper part of the bars on the graph below represents the growth in the number of older people (using my definition) between 1996-2006.  The lower part is the growth in those under 50.  The squares show the share in each area aged 50 years or more in 2006.   
Where do the over-50s live?
This 2006 figures show that the outer parts of the city have relatively more older people: 36% on the Hibiscus Coast (the coastal suburbs north of the metropolitan area), 30% in towns, and 29% in rural areas.  Only 12% of the CBD population was 50 years or older.  (The total for the city was 25%).
The city’s population grew 22% over the ten years to 2006.  The number of older persons grew 33%, accounting for 34% of Auckland’s growth, but only 11% in the CBD and 18% in inner Isthmus suburbs.  By contrast, oldies made up over half in rural areas and 35% in the outer suburbs
The gains were biggest in the southern suburbs, but the shares of growth accounted for were highest in the Hibiscus Coast (38%) and the west (40%).

Auckland Population Growth 1996-2006 - by Age and Area
Thinking about the next twenty years
There seems to be a preference for suburban and even outer suburban living among older people.  It’s not absolute, but it does suggest that we should be wary of overstating future demand for CBD living as our population ages.
Current Statistics New Zealand projections indicate that the 50+ age group will account for over half of Auckland’s growth in the next 20 years.  (The figure is much higher elsewhere, over 80% in Christchurch, for example – and that was before the earthquakes).  So we should be clearly reflecting their tastes and preferences in our plans.  And their attachments mean that the majority of that growth will take place in the suburbs.
What does this mean for the CBD?
The point is not that people do not want to live in the central city.  Many do, although most are likely to be in transition.  They include migrants and temporary residents. That’s not surprising: New Zealanders on their OE also favour living close to the centre of the cities they live in overseas.  Many others are young, in education, early in their career, in non-family households, or not in long-standing relationships.  For a majority – not all – the central city is a place of transition, traditionally a place where they dwell before stepping onto the housing ladder.  And interestingly, young people building their careers and their independence, people in transition, will be a smaller share of our growing population, not a larger one. 
So to maintain strong residential growth in the CBD we will need to influence more people’s preferences, and especially the preferences of older people.  While some will come, it’s a big – if not impossible -- ask to get the sorts of numbers current plans project. 
We need to think about the numbers as well as the anecdotes, and bring balance to our thinking about the CBD, its place in our lives, and how much we might be spending to make it something which it is not.


[2]           See, for example, Davey J (2007) “Ageing in Place: The Views of Older Homeowners on Maintenance, Renovation and Adaptation” Social Policy Journal of New Zealand, 27


6 comments:

Mark said...

Good post.

The other issue to consider is the rise in own your own unit retirement villages. I suspect this relates to high growth in the south. So far these have used large areas of land, ground floor units, with central facilities. From people I know it's worked out very well - personal freedom, but medical backup if needed. In fact there are stories of late 50's going in early.

but where will land come from for next ones? Can they move to an apartment complex in traditional suburbs like Mt Albert? Council needs to understand this industry for its 30 year plan. talking to older residents they have roots in a suburb and want to stay there or head beachside eg Coromandel etc.

Growth can be achieved by releasing unused space in 4-5 bedroom houses - as long as quality can be provided.

Most will be forced to release capital tied up in housing - especialy given current over-vaulation, and NZ problem of too much capital in housing - so this becomes key 30 year issue.

I don't see CBD having any real impact on housing an aging population. There are basic compatibility issues re 15,000 students and retired people. Also our CBD is mainly education, and has limited cultural appeal. It won't have a real mixed use to it, that may appeal to the retired.

Phil McDermott said...

Hi Mark. I agree entirley. I have done a bit of work on the distribution of retirement villages and will post it in the next day or so (I will also respond to your query on education services in the CBD).
The retirement village sector is a real success story - the companies generally seem to understand the market, delivering amenity and achieving higher residential densities at the same time. My understanding is that they also draw people mainly from within a limited radius, or at least from the same geographic sector (north, east, west, etc). This may be why there are so few in the central city (even taking into account a lack of suitable sites.)

Matt P said...

Again development economics will be a big constraint to more older Aucklanders living in the CBD.
There is a very limited market for 3 bedroom, 100+ sq m apartments in the CBD. Most retirees will not want to live in shoeboxes.
Witness how long it has taken to move apartments at the Stamford:

http://stamfordresidences.co.nz/apartments-for-sale/two-bedroom-deluxe.html

Sure, these are top end, so a rather extreme example.

But realistically building an apartment today in the CBD circa 100 sq m it would (dependant on quality, location etc. of course) need to sell for, best guess, upwards of 700-800K minimum

now, if part of the logic behind retirees "downsizing" is for them to free up capital for retirement, then it doesn't take a rocket scientist to conclude that the number of Aucklanders with $1 million plus properties who also want to downsize to live in the CBD is fairly small.

The combination of the GFC, finance company busts, oversupply, negative perception around inner city apartments, large construction cost increases in the mid / late 2000s and minimum planning requirements (minimum apartment sizes etc) adopted around 2006 has pretty much killed apartments in the CBD, at least in the short to medium term

I suspect we will still see some limited high end apartment construction in high amenity locations (eg. near waterfront) but generally we will see very little.

So like Phil I foresee that most ageing boomers will either want to stay in their existing homes as long as possible, or move to retirement villages. I'm not that convinced that many will even look to downsize to smaller townhouses in their neighbourhoods - often buying a newish townhouse will be a similar if not higher price than a detached house on a section in the suburbs.

No simple answers!

Andrew Atkin said...

Another excellent and well rounded post, Phil.

Also we can't forget the possible impact of automated transport technology on location demand for old people, because many of them can't drive (or will make plans on the fact that they soon might not be able to). So this could have a major impact on the development of demand as well. It's just another spanner-in-the-works variable making it impossible to predict future demand on a detailed level.

Mark said...

From what I hear, I don't think Council staff have really engaged with the retirement industry.

if I was them, I'd be trying to understand the industry's economics - ie the cost the market will bear, and any research on markets willingness to move to apartments.

In the inner suburbs it's hard to see them getting land parcels for traditional villages - so I'd see a demand developing for quality apartments in say Mt Albert/Mt eden / Remuera - but can that work economically? ie given cost structures in those locations and the double m2 cost of apartments. Also with need to free up capital, what will people pay anyway?

Also, the industry has relied on capital growth and buy pack structures - would this ever work for apartments with no capital gains?

I said in my submission to Council that aging population was key issue, and every business was thinking about it, but the draft plan pretty much ignored it.

The impacts could be huge, if we end up losing a great % of population in areas for the next 30-40 years, rather than increasing, this would mean an even greater need for new housing. If all the current 4-5 person family homes go down to 2, then one as people stay put rather than moving and freeing up bedrooms.

I looked at Kingsland census figures, and despite growth in apartments / children, the population is the same as 20yrs ago. As an area it went from large flats (4-5 people), to couples renovating, ie a halving in some cases, and then children coming in. If those people stay after the children move on, it will again half the population....

Phil McDermott said...

Mark, we looked at buyer preferences and resident experiences of medium density housing, as well as some of the demographics and economics in a report to CHRANZ last year. There is fair bit of paper to wade through, but it was a fair attempt (I think) to get some evidence together and provide guidance about how to increase the uptake. There are certainly some entrenched behavioural and attitudinal barriers to getting acceptance of higher densities. But there are also significant economic and practical barriers, including planning rules, decisions, and processes that seem inconsistent with policy objectives.
The material can be found at the following address:

http://www.chranz.co.nz/publications.html#sponsor