Renting levels are on the increase in New Zealand
Home affordability is a big deal in many parts of New Zealand. On a weekly basis, there a predictable bruhaha in the media about Auckland alone. The following infographic depicts levels of affordability for typical first home buyers. It is based on the median after-tax income of a couple in the 25-29 age cohort purchasing a home in the lower quartile of house prices in that area.
Using the national average as a benchmark, in January of this year it took 21.7% of the median household income for typical first home buyers to pay the mortgage, a slight improvement over previous years largely due to lower interest rates. Of course getting together the initial deposit is quite another challenge.
As a direct response to affordability in an area, you would think intuitively that the proportion of households renting would be higher in places where housing affordability is an issue. You can see in the following chart that renting is on the increase across all of the cities mentioned in the affordability figure above. Indeed, the 2013 census revealed increases in the proportion of households that rent in every Council in New Zealand, and that those places identified by the infographic as less affordable can generally be found to have more renters. Check out the interesting size of the increase in renters in Hamilton (up to 37.5% of all households from 33.7%) and down at the other end Invercargill (which has increased to 24.8% of households from 20.7%).
Of course affordability is not the only thing to influence decisions on property ownership versus renting, and the following influences can all be products of each.
- Age (renting strongly correlates with age as young people usually rent before settling down) and relationship status
- Housing stock
- Employment (people will rent to remain mobile and follow employment)
- The role and function of a place
If this blog interested you, be sure to read part two of the discussion where the social implications of decreasing homeownership are considered.
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