Many New Zealanders plan to downsize from big family homes when they reach retirement - but it sometimes proves harder than expected.

It's an issue that has been highlighted by the Retirement Commission, which said there was evidence people found it difficult to downsize due to a lack of appropriate properties.

It said there needed to be new ways to stimulate the supply of "affordable and accessible accommodation options for older people".

The commission said three-bedroom family homes or newer multi-level terraced housing would not cater for the changing demands of an older population.

Data in the long-term insights briefing from the Ministry of Housing and Urban Development shows that three-bedroom homes remain the most common type being built, followed by four-bedroom homes.

Two-bedrooms are fewer than 20 percent of the new stock and one-bedroom homes are less than 10 percent.

Over the 10 years to 2023, the number of households containing only one person increased by almost 120,000, but there was only a 40,000 increase in the supply of one-bedroom homes.

Corelogic chief economist Kelvin Davidson said by comparing four-bedroom houses with two-bedroom townhouses it was possible to see which regions might, in a broad sense, be most difficult in which to downsize.

West Coast had the fewest two-bedroom homes compared to four-bedroom houses. That was followed by Waikato, where the number of two-bedroom townhouses was only 16 percent of the number of four-bedroom properties.

Bay of Plenty was third with 17 percent.

At the other end of the scale was Canterbury where there were more than 40 percent the number of two-bedroom houses compared to four-bedroom. Hawke's Bay was second with 38 percent and Southland third with 36 percent.

Davidson said the bigger regions tended to have a more diverse housing stock and be easier to downsize in.

"Waikato and Bay of Plenty are at the other end of the spectrum, they are big regions with big centres but there is always an exception to the rule… Waikato has a large share of lifestyle properties and fancy suburbs with bigger sections."

He said Wellington and Auckland also had more significant apartment markets.

Economist Ed McKnight from Opes Partners said many people underestimated what it cost to sell a house.

"They might think 'well if I sell my $1 million property and buy something for $500,000, then I'll come out with $500'. As a ballpark I always think that it costs around 5 percent of a property's value to sell it. That's not just the real estate agent's fee, but also marketing, staging, legal fees, and moving fees. So in this case, you sell your $1m house. You spend $50,000 selling it. You walk away with $450,000 after buying your new home."

He said people also overspent on their downsized house.

"So you sell your $1m home and intend to move into a $500,000 property. But then when you start looking at those properties, you decide you want to spend a bit more to get something a wee bit nicer.

"We've seen clients who planned to sell a $1.5m four-bedroom home. They wanted to buy a smaller apartment. They bought a smaller apartment … but it still cost them $1.3m. Because they wanted a higher quality apartment."

Some people expected to move to a smaller town, he said, but that could be hard if they did not want to leave families, grandchildren or friends.

"A lot of people haven't thought about the practicalities and trade-offs of how that works. That's why I always encourage investors to think about building wealth outside the family home. Because then you don't have to make the same tradeoffs."

-RNZ.