Housing affordability

Relevance

Affordable housing is important for people’s standard of living. For lower-income households especially, high housing costs relative to income are often associated with severe financial difficulty, and can leave households with insufficient income to meet other basic needs such as food, clothing, transport, medical care and education. High outgoings-to-income ratios are not as critical for higher-income households, as there is still sufficient income left for basic needs.

Current level and trends

In 2008, 29 per cent of New Zealand households spent more than 30 per cent of their disposable income on housing costs, an increase from 26 per cent in 2007 and 21 per cent in 2004. Since the late-1980s, there has been a substantial increase in the proportion of households spending more than 30 per cent of their income on housing. Between 1988 and 1997, the proportion rose from 11 per cent to 25 per cent of households, before levelling off at 24 per cent in 1998 and 2001.

Figure EC4.1 Proportion of households with housing cost outgoings-to-income ratio greater than 30 per cent, 1988–2008

Source: Derived from Statistics New Zealand’s Household Economic Survey (1988–2008) by the Ministry of Social Development
Note: Between 1998 and 2004, the Household Economic Survey was conducted on a three-yearly basis, rather than annually

Socio-economic differences

High housing costs relative to household incomes are of more concern for low-income households. The proportion of households in the lowest 20 per cent (lowest quintile) of the equivalised household income distribution spending more than 30 per cent of their income on housing trebled between 1988 and 1994, rising from 16 per cent to a peak of 48 per cent. The rate levelled off at 41–42 per cent over the period 1996–2001, fell to 34 per cent in 2004 and 33 per cent in 2007, then rose steeply to 39 per cent in 2008. The proportion of low-income households spending more than 30 per cent of their income on housing was more than twice as high in 2008 as it was in 1988.

Age and sex differences

In 2008, 37 per cent of children aged under 18 years lived in households with housing costs exceeding 30 per cent of their disposable income, an increase from 32 per cent in 2007. There was a similar increase for the 25–44 years age group, many of whom are parents living with children.

In 2008, there was no difference between males and females aged 15 years and over in the proportion living in households spending more than 30 per cent of their income on housing (both 27 per cent).

Table EC4.1 Proportion (%) of the population in households with housing cost outgoings-to-income ratio greater than 30 per cent, selected years, 1988–2008

Source: Derived from Statistics New Zealand’s Household Economic Survey (1988–2008) by the Ministry of Social Development
Note: Data is for March years in 1988, 1993 and 1998 and for June years from 2001

Ethnic differences

Households with housing costs in excess of 30 per cent of income are more common when they include at least one non-European adult.⁶⁸From 2007 to 2008, there was an increase in the proportion of households spending more than 30 per cent of their disposable income on housing for households with at least one European, Pacific or Other ethnic group adult. For households with at least one Māori adult, the proportion increased from 8 per cent in 1988 to a peak of 36 per cent in 1997, fell to 21 per cent in 2004, rose to 29 per cent in 2007, and remained at a similar level in 2008 (28 per cent). For households with at least one Pacific adult, the proportion increased from 15 per cent in 1988 to 48 per cent in 1997, fell to 23 per cent in 2004, rose to 30 per cent in 2007 and increased further to 35 per cent in 2008.

Figure EC4.2 Proportion of households with housing cost outgoings-to-income ratio greater than 30 per cent, by ethnic group, selected years, 1988–2008

Source: Derived from Statistics New Zealand’s Household Economic Survey (1988–2008) by the Ministry of Social Development
Notes: (1) Data is for March years in 1988, 1993 and 1998 and for June years from 2001 (2) Household ethnicity is defined by the presence, within the household, of an adult of a particular ethnic group. Adults are defined as people aged 18 years and over

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