Experimental Housing Affordability Measure for potential first home buyers

The Housing Affordability Measure for first home buyers (HAM Buy Median) compares the equivalised* income after housing costs of potential first home buyers in different parts of New Zealand to the estimated national median equivalised income after housing costs for all households.

Image showing: total household income minus mortgage, home insurance, rates equals income after housing costs compared to income after housing costs for all households in New Zealand.

Image showing: total household income minus mortgage, home insurance, rates equals income after housing costs compared to income after housing costs for all households in New Zealand.

The HAM Buy Median identifies the proportion of renters in an area (region, territorial authority and Auckland Wards) whose household equivalised income after estimated mortgage, home insurance and rates for a similar-sized lower quartile house in their area is above or below the estimated national median equivalised income after rent, mortgage payments, body corporate fees, rates and insurance) for all households (including renters and homeowners).

The HAM Buy Median does not set a level at which housing is or is not affordable. Determining affordability depends on each household’s circumstances and expectations of what qualifies as a socially accepted standard of living. This is a challenge common to all efforts at measuring material hardship**. The HAM Buy Median helps us to understand how un/affordable buying a house could be for renters in local areas around New Zealand (territorial authorities and Auckland wards) and how this compares to the overall New Zealand affordability picture.

National

At a national level, the share of potential first home buyer households with below average incomes after housing costs decreased from 73.1 percent in December 2017 to 70.5 percent in December 2018.

For potential first home buyer households at the regional level:

  • The affordability of buying a local home for those in the South Island is better than for those living in Auckland, except in Nelson (74.3 percent), Tasman (75.9 percent) and Otago (71.7 percent).
  • The regions with the highest proportion are Northland and Hawke’s Bay with 78.1 percent and 77.2 percent respectively.
Figure 1: Share of first home buyer (HAM Buy Median) households with below average income after housing costs, national-level (March 2003 to December 2018)

Figure 1: Share of first home buyer (HAM Buy Median) households with below average income after housing costs, national-level (March 2003 to December 2018)

Auckland

The share of potential first home buyer households in Auckland with below average incomes after housing costs decreased from 74.5 percent in December 2017 to 70.8 percent in December 2018, continuing a decrease from 76.4 percent in 2016.

Figure 2: Share of potential first home buyer (HAM Buy Median) households with below average incomes after housing costs, Auckland City (March 2003 to December 2018)

Figure 2: Share of potential first home buyer (HAM Buy Median) households with below average incomes after housing costs, Auckland City (March 2003 to December 2018)

Christchurch City

The share of potential first home buyer households in Christchurch City with below average incomes after housing costs decreased from 66.7 percent in December 2017 to 65.5 percent in December 2018.

Figure 3: Share of potential first home buyer (HAM Buy Median) households with below average incomes after housing costs, Christchurch City (March 2003 to December 2018)

Figure 3: Share of potential first home buyer (HAM Buy Median) households with below average incomes after housing costs, Christchurch City (March 2003 to December 2018)

Wellington City

The share of potential first home buyer households in Wellington City with below average incomes after housing costs decreased from 55.6 percent in December 2017 to 54.0 percent in December 2018.

Figure 4: Share of potential first home buyer (HAM Buy Median) households with below average incomes after housing costs, Wellington City (March 2003 to December 2018)

Figure 4: Share of potential first home buyer (HAM Buy Median) households with below average incomes after housing costs, Wellington City (March 2003 to December 2018)

Methodology notes and data tables

Our Housing Affordability Measure downloads and notes of interest page includes more information about how the data have been analysed, the methodology report and downloadable data tables.

*Equivalised means that this has been adjusted for the number of adults and children in the household.

** A discussion of the issues with measuring material hardship can be found in Appendix 6 of Household Incomes in New Zealand: trends in indicators of inequality and hardship 1982 to 2015 by the Ministry of Social Development.

Published: September 12, 2019

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