CHA is pleased to see the release of the new Housing Affordability Measure, a tier one official statistic.
The Ministry of Business, Innovation and Employment’s (MBIE) new measure will allow the market to be monitored at a more detailed level and has been developed independently by Statistics New Zealand and MBIE. It measures how much money households have left each week after meeting housing costs and sets the benchmark at 2013 figures.
Since the benchmark was set 81 percent of renters would now fall below that level if they bought a house and four out of five New Zealanders would go into serious financial hardship in order to buy a house, the figures show.
There are two very good things about this measure. Firstly, we now have a consistent measure of the changes in housing affordability for both renters and entry level homeowners and it’s really important that we see this measure remain a constantly reported statistic going forward. Secondly, it uses a ‘residual income approach’ – meaning that it measures affordability of housing by making sure that a household has enough money left over after housing costs to pay for the essentials of living. We all need to get our heads around this new measure, how it works, and what its telling us.