About a third of low income households have been spending more than 40% of their income on housing costs, according to new figures from Statistics NZ.
And nearly one-in-10 of total households are now in "material hardship".
The figures come from Stats NZ's Household Economic Survey, conducted between July 2023 and June 2024.
Stats NZ said in the year ended June 2024, over 31% of households earning up to $70,000 spent 40% or more of their income on housing costs.
Across all households, 19.7% spent 40% or more of their income on housing costs, up from 18.2% the previous year.
"Although incomes increased, these statistics show that people spent a higher proportion of their money on housing costs than they had in the past," Stats NZ's household financial statistics spokesperson Chris Pooch said.
"This creates further pressure on a household’s budget, along with things like groceries and petrol getting more expensive over the same time period."
Stats NZ said in the year ended June 2024, 9.4% of households were in material hardship, up from 8.6% in the previous year.
A household is defined as being in material hardship if it lacks six or more of items people regarded as essential. This includes putting off doctor’s visits, going without fresh fruit and vegetables, and putting up with feeling cold.
“What we’re seeing is continued housing costs pressure on both renters and those paying mortgages. Spending more on housing costs means there is less money left over to pay for other necessities,” Pooch said.
Between the years ended June 2023 and June 2024, average annual household equivalised disposable income (before housing costs) increased by 5.5%. However, average weekly rent payments increased 9.0% and weekly mortgage payments increased by 8.7%.
More than one-in-three households (38.2%) felt that their income was ‘not enough’ or ‘only just enough’ to meet their everyday needs. This figure has increased over the last two years.
In the year ended June 2024, 28.4% of households that did not own their home were spending more than 40% of their disposable income on housing costs.
Average weekly rent payments increased from $427.10 in 2023 to $465.50 in 2024 (up 9.0%).
Over half (55.2%) of renters felt that their income was ‘not enough’ or ‘only just enough’ to meet their everyday needs in the year ended June 2024.
One-in-seven households (14.8%) that owned or partly-owned their home spent more than 40% of their disposable income on housing costs in the year ended June 2024.
Last year Stats NZ had reported that in the year ended June 2023, average mortgage payments increased 27.5%. Average weekly expenditure on mortgage payments, for households with a mortgage, had therefore risen to $605.60 as of June 2023, compared with $475.00 in the previous year. This was the biggest single-year increase since 2008.
And average weekly mortgage payments continued to increase in 2024, from $605.50 to $658.20, an increase of 8.7% on the previous year. Mortgage interest payments rose 35.8%, while mortgage principal repayments were down 17.8% from the previous year.
In 2024, households making mortgage payments were more likely to report that their income was ‘not enough’ or ‘only just enough’ (34.4%, up from 31.5% in the year ended June 2023).
45 Comments
Somethings are still much better in NZ though - i.e. the number of surfers on any given break (near a city/large town) means we always catch a LOT more waves than our Aussie friends (e.g. in surfers).
NZ is always trying to compete on a like for like basis... we ought to adapt to take more advantage of what we DO have
Just saying
Just under 1% of Kiwis were understood to be homeless, most of whom were put into severely overcrowded facilities by the state.
Then Census 2023 found that a further 60k NZers live in uninhabitable dwellings, i.e., without basic features such as running water, electricity and toilets.
That's over 100k Kiwis (2% of population) living in piss-poor conditions while successive governments have been either tinkering with housing policy or outrightly tipping the scales further in favour of the "haves".
All this before you start considering for all our young children living in damp, often mouldy, houses (36% homes were self-reported as being mouldy).
@profile, How is 'some people living in cars' a 'crony capitalism' ?
About "New Zealand has so much land", do you not think that maybe the reason we haven't converted more of NZ land into housing developments is patly to protect our natural environment, rather than because of crony capitalism? Tell the Greens that they are crony capitalists, see if they'll agree with you.
It is no Mystery - crony capitalists in local, national government and other professional grifters like greens, push up the cost of bare sections to prices that the working man cannot afford to purchase. Free up land and adopt Californian and Japanese building codes and get people out of cars.
"The insanity - no, really now deliberate evil - that is NZ govt (central and local) land use restrictions. All that just for a rather small section, in a land-abundant country"
1/3 of the country is protected - one of the highest % on the planet - coupled with a population density similar to PNG - the South Island similar to Russia To suggest we are short of land is laughable.
https://ourworldindata.org/grapher/terrestrial-protected-areas?tab=table
But how long does it take for those born in low income families to approach the mean income in their society - in NZ it is four generations
https://www.weforum.org/stories/2018/08/moving-up-the-income-ladder-tak…
In the US and UK five, China and India seven and Columbia eleven generations.
"...To what extent do everyday Americans experience these levels of affluence, at least some of the time?
In order to answer such questions, Thomas A. Hirschl of Cornell and I looked at 44 years of longitudinal data regarding individuals from ages 25 to 60 to see what percentage of the American population would experience these different levels of affluence during their lives. The results were striking.
It turns out that 12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year. What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution, 56 percent will find themselves in the top 10 percent, and a whopping 73 percent will spend a year in the top 20 percent of the income distribution"
https://www.nytimes.com/2014/04/20/opinion/sunday/from-rags-to-riches-t…
"...Who should be surprised that 60-year-olds have higher incomes and more wealth than 30-year-olds? Moreover, that was also true 30 years ago, when today’s 60-year-olds were just 30. But these are not different classes of people. They are the same people at different stages of their lives. At some times and places, there have been whole classes of people who lived permanently in poverty or in luxury. But, in the United States today, the percentage of Americans who fit either description does not reach beyond single digits."
Wealth is much more important than income: a study of Norway wealth mobility showed over a 23 year period:
- 58% of the bottom 50% of wealth remained in this category
- only 7% of all those in the 10% of wealth fell into the bottom 50%, with only 0.7% of all those in the top 1%
and that:
households in the top 0.1% bracket are 292 times more likely to have originated from the same top 0.1% group than the average likelihood across the entire age group.
and this is from one of the most egalitarian countries in the world
here is the full article https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4362818
Wealth is much more important than income
Very true. Ronald Reid had the income of a janitor (literally) but amassed many millions USD. https://en.wikipedia.org/wiki/Ronald_Read_(philanthropist)
"it's is a clear lesson on why to strive at school to be able to secure a good job, or one with upside, to work your way out of low income land."
Yes. Social mobility.
No one gets to choose if they are born into a low income household, middle income or a wealthy household. Those who are born into a lower income household have challenges that the other two groups may not face. People do not start at the same start line - some people have a massive head start in life compared to others.
Have seen many students from low income households choose courses based on their subject interests with little to no consideration of future employment opportunities, future income levels. Fine balance between area of interest and future career opportunities.
A friend recently completed tertiary education and there are very limited employment opportunities in that area with that skillset and training. Now working in a customer serving role in a retail store.
Combine that vocation with a lack of financial literacy, this can lead to a potentially more challenging future, requiring a lot of luck for upward social mobility.
I started with nothing (twice, 1st marriage breakup after 15 yrs). Left school at 16 to work in factories all my life. Married at 20, kids at 21/23, own home at 23 (3 mtges, 3 jobs) Uni at 32, night classes 3 years while working fulltime. Redundant at 60, still working part time at 70. No govt assistance until nz super.
The harder & smarter I worked, the luckier I got.
I started with nothing (twice, 1st marriage breakup after 15 yrs). Left school at 16 to work in factories all my life. Married at 20, kids at 21/23, own home at 23 (3 mtges, 3 jobs) Uni at 32, night classes 3 years while working fulltime. Redundant at 60, still working part time at 70. No govt assistance until nz super.
The harder & smarter I worked, the luckier I got.
Kiwikidsnz,
Good for you. Great story of upward social mobility. Always keen to gain valuable life wisdom from others who have gone through personal life challenges.
1) what learnings did you learn from your first marriage and in particular spouse selection? What were the red flags that you overlooked with respect to the first spouse? People say that the biggest decision that people make in life is their choice of spouse.
2) what learnings have you had on how to have a successful marriage? (I'm assuming that you're still married)
3) what other life learnings should younger people know?
Thank you in advance.
I acknowledge you probably don't intend to be personal however I don't feel comfortable discussing my private life in public forums so won't respond in detail
I've previously mentioned here that I was remarried for ~30years, my 2nd wife passed away >3yrsago. A much more successful relationship & agree it's the biggest decision in life, personally and financially.
https://youtu.be/eISwyDAyzLY?feature=shared
Thank you for your response. Was unaware that you had lost your wife - my condolences to you.
Fully respect your privacy. Wasn't asking about details, more about general ideas.
I see many people choosing their spouse using a decision making framework that results in a higher probability of relationship failure.
This is a fallacy. Many people study hard, work hard and are still low income. There are many other structural inequity factors at play like family connections, family circumstances (single, married, domestic violence/coercive control), family support, single parenthood etc) plus just out and out luck. I know this by personal experience.
No, more of the payments going to interest rather than principal. People that were making extra principal payments stopped as they rolled onto higher rates. We've just passed the peak of effective mortgage rates due to people coming off the longer fixes they took in 2022. It's all downhill from here on effective mortgage rates.
So, what have we got?
1. Extra principle payments reduced due to interest load increasing.
2. Principle payments reducing as people switch to holidays under stress.
3. Principle payments reducing as principle is paid down (lump sum then reduced payments afterwards, as principle payments increase over the life of a table mortgage?).
4. Principle payments reducing as property sold and loan cleared.
5. Principle payments reduced as loan extended.
Did I miss any? Do we know the stats on each? I know people formerly in (1) now in (2), and also some in (4). I think (3) is a very low %.
I guess my question was too simplistic, and I appreciate your response.
As rates go up many people extend mortgage term, as down they shorten term
This is allowed there is no pretending going on
Even going to Interest only if you lose your job is not pretending, its the bank working with CCCFA to do the best to keep the people and family in a home.
Bigger issue if you cannot afford the interest payments but if you had say 50% equity I see no reason to loose a home.... if its an investment property the bank will have a different view...
Article quotes Stats to June 2024, since then average incomes have risen while both mge interest rates & rents have declined.
The subjective descriptions of material poverty are as useful as the definition of children in poverty ("less than 50 percent of the median disposable income after housing costs are deducted"), also published today. Which definition ensures that child poverty will always continue.
https://www.rnz.co.nz/news/political/542461/child-poverty-rates-stall-g…
If they can afford to get tattoos, they're not really living in poverty are they? And a casual observation would suggest that there is very few people around who dont have the money for tattoos.
Maybe if they spent less on their full sleeves they could afford a mortgage. Or at least avocados.
"If they can afford to get tattoos, they're not really living in poverty are they?"
There is a large amount of financial illiteracy by most households. There is also a large number of households that are completely unaware that they are financially illiterate - they don't know what they don't know. Financial illiteracy rates are certainly higher in some cultures.
Have you seen the price of Meth lately?
Dysfunction is expensive.
Yes, addictions are expensive - drugs (both legal and illegal), tobacco, gaming, gambling, food, alcohol, shopping, cosmetic procedures, etc
They are not only financially expensive for the individual but also on the financial resources of the relevant welfare agencies, and the families of the affected individual, as well as the mental stress on the family.
https://www.nzherald.co.nz/bay-of-plenty-times/news/dad-of-tauranga-met…
https://www.nzherald.co.nz/nz/p-charge-a-socialites-fall-from-grace/2F6…
https://www.nzherald.co.nz/nz/crime/property-millionaire-meth-addict-an…
There are also those who are less fortunate in society with natural born issues . No one gets to choose their physical state at birth - mental health issues, physical health issues, mental learning disabilities, etc where governments have their role.
The headline, "About a third of low income households have been spending more than 40% of their income on housing costs" is extremely misleading ...
Why?
Simply because the remaining 2/3rds are also facing higher costs ... albeit it may be less than 40% but it almost certainly has risen.
So let's be outraged for the bottom 3rd - but let's also be 'pretty pissed off' on behalf of the other two thirds.
(And maybe also spare a moment to consider our government's policy settings, e.g. tax cuts for landlords - and - those of the RBNZ with regards preferential LVRs and DTIs for residential property 'investors'.)
Edit: My point is that basic housing costs in NZ are way too high.
And because they are so high, it literaly fucks up everything from the cost of living, wages, profits businesses demand, banking cost (like a tax by the rich!), our balance of payments, etc. etc. The list is long. Basic needs, like housing, in NZ have become a way to ensure the rich get richer, much faster! It must stop.
Let's stop this with the most obvious one ... Housing !!!
So let's be outraged for the bottom 3rd - but let's also be 'pretty pissed off' on behalf of the other two thirds.
Yes, I get the feeling that regardless of income, all those renting are paying all of the landlord's expenses - plus the landlord expects a profit on top of that. As I said to the Parliamentary Select Committee - the only difference between a landlord and a tenant is a deposit.
And many landlords don't even have that deposit in cash/savings - they just borrow for another rental based on the capital gains made on all the other properties they are holding.
Time the market for private rental offerings gets regulated.
I’d overhaul KO. Effective immediately I would review every long term tenancy (5+years) to ascertain continued eligibility. Those who can live independently outside of KO would be given 3-month notices. The well known rort of family ‘A’ getting a cheap house then sub letting a room to 2 others eg $100 each would be finished. The mindset of it being ‘my house’ as my parents lived here 20yrs ago needs to end.
A social acquaintance works for KO and does the purchasing for refits. There are some horror stories…..
When was $70 considered low income? Perhaps its time to move income tax rates to the right? But all that will do is allow rents and mortgage costs to rise and fill the void. We are bleeding cash to our housing market.
Rents and home prices move to the right as incomes and ability to borrow increase. Its almost like the system is designed that way :)
If you want to get ahead get a heap of rentals and prey the government doesn't shut down the multi billion dollar accommodation supplement giveaway.
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