The Housing Affordability Measure for potential first home buyers
The Housing Affordability Measure compares the income after housing costs of potential first home buyers in different parts of New Zealand to the national median income after housing costs for all households.
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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 Measure identifies the proportion of potential first home buyers in a particular area whose income after housing costs is above or below the national median. The Measure is based on real incomes of real households.
Benefits of the measure
The Housing Affordability Measure shows a trend, which supports central and local government to identify and respond to affordability challenges that are specific to each housing market.
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Example of a Housing Affordability Measure bar graph with a trend line cutting between the pairs of stacked bar segments, each pair adding to 100%. The y axis shows percent, the x axis years, and labels indicate that the top bar segments show potential first home buyer households with above average leftover income after housing costs. The bottom bar segments show potential first home buyer households with below average leftover income after housing costs. The trend line through the middle represents the Housing Affordability Measure.
What does this mean for potential first time buyers?
Potential first home buyers in Christchurch
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Example household in Christchurch of a couple with no children named Dan and Fran.
On the left, 2003 data shows that they make $1,055 a week in total, with weekly mortgage costs of $190, home insurance costs of $5, and rates costs of $15. This leaves them with a weekly income after housing costs of $845, above the average income after housing costs in 2003 of $771 a week.
On the right, 2016 data shows that they make $1,803 a week in total, with weekly mortgage costs of $420, home insurance costs of $12, and rates costs of $40. This leaves them with a weekly income after housing costs of $1,331, above the average income after housing costs in 2016 of $1,017 a week.
Potential first home buyers in Christchurch: Housing Affordability Measure
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Example of a Housing Affordability Measure graph for Christchurch from 2003 to 2016 with a trend line cutting between the pairs of stacked bar segments, each of which add to 100%.
The y axis shows percent, the x axis years, and the key indicates that the top bar segments show potential first home buyer households with above average leftover income after housing costs and the bottom bar segments show potential first home buyer households with below average leftover income after housing costs. A label states that if the Housing Affordability Measure (as shown by the trend line) decreases, income after housing costs increases.
Below, there is a tick symbol next to the statement, “The Measure shows the trend of affordability over time” and a cross symbol next to the statement, “It does not tell us how much income after housing costs a household needs to afford a home”.
