9 Sep 2016

NZ's lowest earners spend half of their income on housing

9:13 am on 9 September 2016

Rising housing costs have put the country's lowest earners under intense financial pressure, the latest household incomes report shows.

An auction sign outside a house for sale in Auckland.

The MSD's Household Incomes Report said those on the lowest incomes spend more than half what they earn on housing. Photo: RNZ / Claire Eastham-Farrelly

The Ministry of Social Development's annual Household Incomes Report shows while income inequality has not increased in the past decade, people are spending more of their pay on keeping a roof over their heads.

The report said the lowest 20 percent of earners spent 54 percent of their income on housing in 2015, compared with just 29 percent in the late 1980s.

The figures also show housing costs for all earners rose from 14 percent to 20 percent.

The report comes at the end of a week when average house prices in Auckland went over $1 million for the first time and New Zealand topped a global list for house price rises.

The government has put more money into emergency and social housing, but Labour argues the failure to deal with the housing crisis has made inequality worse.

Labour Party finance spokesperson Grant Robertson said the poor were paying a heavy price, when the lowest income New Zealanders were spending half their income on housing costs.

"That's contributing to huge housing stress and income stress for a large number of New Zealand families."

Social Development Minister Anne Tolley said there was no doubt it was tough for the people who have to spend more than half their earnings on housing.

She says the government has introduced measures, but if the trend continues, a lift of the accommodation supplement - a weekly payment to help with rent, board or cost of owning a home - is worth considering.

"If [the measures] don't have an effect then I think it's something that we have to have a look at, bearing in mind it is a huge expense for the taxpayers."

Ms Tolley said the government was already spending about $2 billion a year in housing support.

Prime Minister John Key conceded homelessness was rising because high rents were putting intense pressure the poor, but said the government had responded by putting more money into emergency and social housing.

"We just have to accept, I think, that that as those rents have risen it is putting real pressure on some people and we need to respond with better support for them."

Mr Key said building more houses was taking longer than expected.

The Incomes Report also monitors income inequality and finds "no evidence of any sustained rise or fall" in the last 20 years.

The top 1 percent of taxpayers receive about 7-9 percent of income - a figure which has held steady since the early 1990s. New Zealand ranks in the lower middle of the OECD for this statistic, similar to Australia, Spain and France, the report said.