A 'decent home' is affordable

Housing affordability is about whether people can pay the costs of living in a house that meets their needs. These include costs to get a house (entry costs), and to live in it and maintain it (ongoing costs). Entry costs include things like the money needed to build a house, to make a deposit on a house, or to pay the bond for a tenancy. Ongoing costs include the money needed to make regular mortgage or rental payments, to purchase insurance, pay rates, and pay for necessary repairs and maintenance. What is or isn’t affordable will be different for people with different incomes. For some households, lack of resources means that almost no housing is affordable.

Our indicators show that affordability has not improved. There has not been progressive realisation and instead things have got worse. Housing is less affordable than it used to be. Measuring Progress therefore shows a failure in the affordability dimension of the right to a decent home. Read more about the indicators we have used and what the data shows

Indicator 1: Home ownership

Bar graph for Trends in home ownership during census years of 1936 - 2018 by ethnicity with European averaging 80 percent while Maori average 40 percent

In New Zealand homeowners are more likely to find their housing affordable than renters. Even though it is more affordable to pay a mortgage than it is to pay rent, it’s becoming increasingly unaffordable to buy a first home. Home ownership rates have declined from their peak in the 1990s, especially for Māori. Renters are increasingly excluded from the financial and social advantages of home ownership. Worst of all, during the period that home ownership rates declined, renting became less affordable.

Indicator 2: High housing costs

Bar graph showing households paying 30% or more of their disposable household income, with renters paying twice as much as home owners over the years June 1988 - June 2020 High housing costs

How do we know whether housing is “affordable”? One way is to compare how much income a household has with how much of that income it spends on housing. If a household spends more than 30% of its income on housing costs, this may mean that the housing isn’t affordable for the people living there. If we assess affordability like this then we can see that housing is consistently less affordable for renters than people who own their own home. Just under half (45%) of renters spent 30% or more of their income (after tax) on housing in the year ended June 2020. By comparison, just 23% of homeowners spent a similar proportion of their income.

We can also see that housing affordability has gotten worse for everybody since 1988. If we compare housing costs in 1988 and 2020, only 13% of households had high housing costs in 1988, but 30% of households had high housing costs in 2020.

Indicator 3: People rating their housing unaffordable

A bar graph showing the proportion of people rating their housing unaffordable by selected demographic groups, 2018. The highest, at almost 20 percent, is One parent with child(ren). Next is Pacific peoples, those in a non home owning household, unemployed, disabled, 35-44 year olds and more. The total New Zealand average on this graph is 10 percent.

The costs of unaffordable housing are not spread equally across society. While housing has become more unaffordable for everyone generally, housing is even more unaffordable for some groups. In the General Social Survey 2018 people were asked about their housing costs. The survey asked people to rate their housing on a scale of 0 to 10, where 0 is very unaffordable and 10 is very affordable.

Self-reported affordability data from the survey showed that the following groups were most likely to rate their housing as unaffordable: one parent families, recent migrants, Māori, Pacific peoples, low-income earners, non-owner-occupiers, Aucklanders, the unemployed, disabled people, and those with no qualifications. These groups were among the most likely to rate their housing affordability at 3 or lower. Data from the survey was released in 2019. The survey would normally have run again in 2020, but it was postponed until 2021 because of the COVID-19 lockdown. An update on this data will next be available when General Social Survey 2021 is published in 2022.

Read more commentary on the affordability data here