By Greg Ninness
Rents are continuing to rise faster than take home pay in Auckland and Wellington, but in Canterbury the reverse is true, according to Interest.co.nz's latest quarterly review of rents.
This shows that in the first quarter of this year, the average rent for all new tenancies through out the country registered with the Ministry of Business, Innovation and Employment was $446 a week, up $23 (+5.4%) compared to the first quarter of last year.
Over the same period, the average pay packet rose from $929.84 a week after tax*, to $960.87, an increase of $31.03 a week (+3.3%).
The fact that rents are rising more strongly than wages has some potentially significant implications for the economy, because it means progressively more of the household budget is being eaten up by rent, leaving less money for people to save or spend on other things.
However there are also some significant regional differences.
|Average Weekly Rent||Average Weekly Net Pay|
|Region||Q1 2016||Q1 2017||Q1 2018||Q1 2016||Q1 2017||Q1 2018|
In Auckland, the rental and income figures both follow the national trend very closely.
The average rent in Auckland increased by $23 a week (+4.4%) between the first quarters of last year and this year, while average net pay was up $33.63 (+3.4%) over the same period.
But in the Wellington region, rent rises have far outstripped pay increases.
Between the first quarters of last year and this year, the average rent in Wellington increased from $470 a week to $506, up $36 (+7.7%).
But over the same period average after tax pay increased from $1014.73 to $1045.62, up $30.89 a week (+3%).
That means rents in Wellington increased by more than average take home pay in both percentage and actual dollar terms and that appears to be part of a longer term trend.
In the two years since the first quarter of 2016, the average Wellington rent has increased by $65 a week, while average take home pay in Wellington has increased by just $52.04 a week over the same period.
But while renters in Wellington may be doing it tough, renters in Canterbury are on the pig's back, with rents there hardly moving and wages continuing to rise.
The average rent in Canterbury was $446 a week in the first quarter of this year, up just $8 a week compared to the first quarter of last year and unchanged from the first quarter of 2016.
However average take home pay in the region has increased by $30.20 a week between the first quarter of last year and the first quarter of this year, and by $45.42 since the first quarter of 2016, leaving Canterbury's renters laughing all the way to the bank, or perhaps to the pub.*
*Notes: Average rent is calculated by interest.co.nz from bonds data supplied by the Ministry of Business Innovation and Employment. Average weekly net pay in based on pay rates in Statistics NZ's Querterly Employment Survey (Full Time Equivalent, including overtime) with income tax and ACC employee levy deductions calculated by interest.co.nz using IRD's standard rates for individuals. This does not include any student debt repayments or Working For Families allowances.