Analyst Emma Vitz looks at rental data, finding that New Zealanders are spending twice as much as 30 years ago to live in increasingly squalid homes.
Renting in New Zealand is often seen as a temporary stopgap on the road to homeownership. Some see it as an uncomfortable phase that young people endure for a few years as they save up for their bond, with two-minute noodles for dinner and wearing a sweatshirt in bed to avoid turning on the heat.
But the reality is that in 2018, 35.5% of New Zealanders did not own their own home, a number that has been increasing since the 1980s. Renting is no longer exclusively the preserve of younger people. Over 31% of people aged 65 and over do not own their home, and this percentage has increased for all age groups since 2006.
With that in mind, I wanted to see how the affordability of rentals has changed over time. Again, I took the common financial rule of allocating 30% of your gross income to housing and calculated how much a household would need to earn to pay the average rent since 1993.
The prices were inflated to current dollars using the Consumer Price Index to make them comparable to the 2021 figures. I used the rental data from Tenancy Services. This data includes all rentals in New Zealand, from studios to large family homes. I assumed the average would represent an average sized house in New Zealand.
Across New Zealand, the cost of renting has nearly doubled in today’s dollars since 1993. In 1993, income of $ 45,856 in today’s dollars was needed to pay for the rental. average. Today that figure is $ 84,059. In relative terms, Northland saw the largest increase in rental prices with a 108% increase in current dollars. Other regions like the Bay of Plenty and Marlborough also saw strong increases.
As more and more people are renting for longer and rental prices have increased significantly over time, one can expect an improvement in the quality of rentals.
However, the Well-being statistics show that the quality of housing differs significantly between tenants and owners of their housing.
In 2018, 36% of renters said their home was always or often too cold, compared to just 15% of those who owned their home. Similarly, 49% of renters said their home was sometimes or always damp, compared to 27% of owners. Of the 47% of renters who said their home was moldy, 56% said the mold was larger than a sheet of A4 paper. This compares to 30% of homeowners with a moldy home, 37% of whom said the mold was larger than a sheet of A4 paper.
These numbers are an indictment of the overall quality of housing in New Zealand, but they also show that renters are more likely to experience the worst of these conditions. And these tenants aren’t exclusively students who can look back and laugh at the time an entire window fell off its hinges in the middle of the night, letting in Wellington’s howl (it happened to me). More and more families, and even retirees, find renting out the only long-term option.
Emma Vitz is an actuarial analyst for Finity Consulting. The opinions expressed in this story are his own and do not represent those of his employer.
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