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The New Zealand housing crisis

Housing issues in New Zealand affect our wealth, health and quality of life 

New Zealand has some of the least affordable housing in the developed world. Our current housing crisis has a negative rippling affect across the whole economy, affecting New Zealand’s wealth distribution, health and social wellbeing. 

These impacts are felt most acutely by families and individuals with low incomes. The 2018 
Government report A Stocktake of New Zealand’s Housing (8.10 MB) began with the following statement and accurately illustrates the many issues New Zealanders are facing. 

With homeownership now at a 60-year low and families forced to live in overcrowded houses, it is clear New Zealand’s housing system is failing too many people. That an unknown number of children are living in cars and thousands more are admitted to hospital every year with preventable illnesses caused by poor housing, is nothing short of a tragedy.

Buying a home now costs up to 10 times a household income 

Historically, housing affordability had been similar between nations, but over the last 20 years this has deteriorated significantly, with New Zealand becoming more and more unaffordable.  

  • Rents and house prices in New Zealand have increased at a much faster rate than household incomes. 
  • A house purchase price can cost between eight and 10 times household income. 
  • A purchase price of three times household income is considered affordable. 

We are experiencing these issues across the majority of New Zealand’s main cities.  

The high cost of housing keeps a family in a cycle of poverty 

Housing is a significant element of the household budget and an important determinant of the standard of living. The high cost of housing keeps families in a cycle of poverty, as insufficient income is left to meet other basic needs such as food, clothing, transport, medical care and education. 

300,000 older New Zealand homes are un-insulated, damp and cold 

A large number of low income whanau live in older housing stock, which are most often cold and damp. 

Almost 1 in 9 people live in a crowded house 

Many New Zealand families share their home with other families to save money, which leads to overcrowding, increasing the risk of transmitting infectious diseases. 

Another aspect that feeds overcrowding is the unaffordability of heating a home. Children and other household members sleep in the same room to keep warm during winter which again stimulates diseases. 

  • Almost 1 in 9 people (10.8 per cent) of New Zealand households were living in a crowded house at the time of the 2018 Census { https://www.stats.govt.nz/reports/housing-in-aotearoa-2020}. 
  • Overcrowding is more common for Pacific people and Māori. 
  • Almost 4 in 10 Pacific people living in a crowded house 
  • 1 in 5 Māori experiencing crowding 

Read more about overcrowding and the six dimensions of housing adequacy. 

Home ownership rates are decreasing 

The proportion of people living in their own home was the lowest in almost 70 years at the time of the 2018 Census. (Census Housing Crowding Data (2018)

Census data shows that home ownership peaked in the 1990s at 74 per cent and by 2018 had fallen to 65 per cent of households, the lowest rate since 1951. Homeownership rates have fallen in every region since 1991, with the largest falls in the Auckland region. Pacific peoples and Māori are less likely to own their home than other ethnic groups.  

Living in a rental property may give someone a place to live, however, there are three main problems.

  1. House rents are high and increasing.
  2. The quality of rental properties appears to be substandard and deteriorating.
  3. The rental market provides few rights and protections for renters. (Housing in Aotearoa: 2020 Report)  

Healthy Home Standards became law in 2019 (Tenancy Services website, 2021) and will go some way to address some of these concerns, but there is still more that could be done in this space.  

Restrictive rental terms and conditions

New Zealand has one of the most restrictive rental terms and conditions in the world. 

Based on a sample of international comparisons by the Grattan Institute, augmented by an analysis by NZIER for New Zealand, New Zealand has some of the most ‘restrictive’ rental jurisdictions from the viewpoint of the renter. 

Lease terms are short, tenants can be asked to move with short notice, leases can be terminated on almost any condition as long as notice is given, and personal customisation is often difficult. Changes to the Residential Tenancies Act – Amendment Act 2020  will go some way to address some of these concerns but there is still more that could be done in this space. 

Read more about preferred tenure and the six dimensions of housing adequacy. 

Sources

  1. A Stocktake of New Zealand Housing (2018) P. Howden-Chapman, A. Johnson, S. Eaqub. New Zealand Government
  2. 16th Annual International Housing Affordability Survey (2020); 17th Annual Demographia International Housing Affordability Survey (2021)
  3.  Housing in Aotearoa: 2020 Report (based primarily on Census 2018 data)
  4.  Our children, our choice, focuses on housing, Child Poverty Action Group (2014)
  5.  Census Housing Crowding Data (2018), Stats NZ
  6.  Tenancy Services website, About the Healthy Homes Standards (2021)
  7.  The home affordability Challenge, NZIER (2014)
  8.  Tenancy Services website – Residential Tenancies Amendment Act 2020

 

 

Today a house could cost 6-8 times a household income

Rents and house prices in New Zealand have increased over the past twenty years at a much faster rate than household incomes. These days an average New Zealand house can cost six to eight times higher than household income, while three times is considered affordable.4,1

The high cost of housing keeps a family in a cycle of poverty

Housing is a significant element of the household budget and an important determinant of the standard of living. The high cost of housing keeps families in a cycle of poverty, as insufficient income is left to meet other basic needs such as food, clothing, transport, medical care and education. Read more about affordability and the six dimensions of housing adequacy.  

About 300,000 older New Zealand homes are un-insulated, damp and cold.

A large number of people on low incomes live in older housing stock, which are most often cold and damp.3  Lack of heating and insulation means that homes are ill-equipped to deal with winter temperatures. These poor conditions are linked to increased illnesses and infections, especially in young children. The flow-on effects from this unhealthy environment erodes families’ hope and self-worth, and impairs children’s ability to succeed in school. In addition cold, damp homes cost a lot to heat, which is unaffordable for many low income families.

10% of the New Zealand population lives in overcrowded homes.

Many New Zealand families share their home with other families to save money, which leads to overcrowding. The most recent statistics show that 10% of New Zealand households are overcrowded2. Overcrowding is more common for Māori (23%) and Pacifica people (43%). Overcrowding also increases the risk of transmitting infectious diseases. Another aspect that feeds overcrowding is the unaffordability of heating a home; children and other household members sleep in the same room to keep warm during winter which again stimulates diseases. Read more about overcrowding and the six dimensions of housing adequacy.

Home ownership rates are decreasing

In 2013, 64.8 percent of households owned their home or held it in a family trust, down from 66.9 percent in 2006. In 1990 76% of Kiwi’s owned a home. By 2013 this number fell to just 63%.4 Living in a rental property may give someone a place to live, however these families may not be able to really make it their own, due to the contractual agreements that are in place. Length of tenure is often fixed and there is limited freedom to customise the home to personal preferences, such as colour, decoration or having a pet. In addition, owning a home is an investment in the future, it reduces future housing costs and gives security and greater stability. Achieving home ownership allows a family to stay in a neighbourhood for as long as they want and become an on-going contributor to their community.

New Zealand has one of the most restrictive rental terms and conditions in the world

Based on a sample of international comparisons by the Grattan Institute, augmented by an analysis by NZIER for New Zealand, New Zealand has some of the most ‘restrictive’ rental jurisdictions from the viewpoint of the renter. Lease terms are short, tenants can be asked to move with short notice, leases can be terminated on almost any condition as long as notice is given, and personal customisation is often difficult (such as pets, minor alterations and decorations).4 Read more about preferred tenure and the six dimensions of housing adequacy.
SOURCES: 1. 10thAnnual International Housing Affordability Survey (2013); 2. The Social Report – Ministry of Social Development (2010); 3. Our children, our choice, focuses on housing, Child Poverty Action Group (2014); 4. The home affordability Challenge, NZIER (2014)

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