A few weeks back, Statistics New Zealand released its Household Living Costs Price Indexes, which revealed that low-income households’ costs are growing at a much faster rate than high-income households, due in part to rising housing rents.
Today, Interest.co.nz reports that rents across New Zealand are rising at more than twice the pace of wages:
Housing rents have been rising at more than twice the pace of average net pay throughout the country…
Interest.co.nz has compared the average net pay* and average rents* in the third quarter of last year with the third quarter of this year, in the Auckland, Wellington and Canterbury regions and for the whole of the country.
This shows the average residential rent across the whole country was $423 a week in the third quarter (July to September) of this year, up $20 a week (5%) compared to the same period of last year.
Over the same period, average net pay increased by $19.03 (2.1%) per week, which means rising rents would be taking up an increasing share of take home pay.
That suggests people on average or below average wages who are renting are likely to be worse off now than they were 12 months ago because they would probably also have faced increases in other living costs, and wages would not have kept up.
In Auckland average net pay rose from $942.95 in the third quarter of last year, to $962.18 in the third quarter of this year, an increase of 2.0%.
But average rents in Auckland grew at more than twice that pace, rising from $500 a week to $521 a week over the same period, an increase of 4.2% (see table below).
In dollar terms, average take home pay in Auckland has risen by $19.23 a week over the 12 month period, while the average rent has risen by $21.
It has been well documented on this site that Auckland’s housing shortage continues to worsen, given dwelling consents are running at just over 10,000 per annum:
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Whereas Auckland’s population grew by 42,700 (2.65%) to 1.66 million in the year to June, 28,900 (1.79%) coming form net overseas migration:
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Like the Coalition Government in Australia, the former NZ National Government pinned the blame for Auckland’s housing crisis on a lack of supply and rigid planning, without addressing the many demand-drivers under its control that are also making housing unaffordable, let alone holding back wages.
Now it is up to the new Labour-led Coalition Government to remedy the situation via its comprehensive housing and immigration policies.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
