Housing is severely Unaffordable in New Zealand
according to Demographia definitions
The cost of housing is a real burden for Everyday Kiwis - "we call it a cost of living crisis"
In New Zealand, housing is severely unaffordable. The cost of homes has skyrocketed over the past few decades, far outpacing wage growth. As a result, many Kiwis are spending a large portion of their income on housing—whether through rent or mortgages—leaving limited funds, or nothing, for essentials like healthcare, education, and fixing things that break.
The Impact on Kiwis:
High Rent Costs:
Nearly 40% of renters are spending over a third of their income on rent, making it harder to save for a deposit.
Limited Savings:
Families struggle to put money aside due to rising living costs, preventing them from saving for home ownership.
Generation Rent:
Many young adults are locked out of the housing market, often facing the prospect of renting for life with little hope of buying a home.
A reality that has wide and deep Consequences for nearly everyone in New Zealand
The cost of housing affects more than just those struggling to find a home. It impacts:
Health and Wellbeing: Families in inadequate housing are more likely to face mental health issues, respiratory illnesses, and other chronic conditions.
Children’s Education: Frequent moves and housing instability can disrupt a child’s education, leading to lower academic outcomes.
Communities: When people can’t afford to live in stable, long-term housing, they may become disconnected from their communities, leading to weaker social bonds.
Sometimes the medicine is as bad as the disease
There are two ways to improve affordability: 1) reduce the price of a house or 2) increase wages;
Houses are $400,00 to $500,000 dearer than they would be if they were affordable. If houses prices were suddenly adjusted by that much there would be some very uncomfortable impacts. Many home owners would have no equity, banks would be under pressure, and retirement plans are no longer useful.
Wages would need to increase by about 1/3. What would actually happen is the banks would allow everyone to borrow more and so houses prices will increase and still be more than six times income. If those pay rises happen suddenly interest rates would also rise a lot.
That’s why we need a new approach—one that reduces the financial burden on homebuyers and ensures that Kiwis can afford to live securely and independently.
