Rent/HH Income

1998 to 2019, Rent is Always 18-24% of Household Income

Over the last 20 years, rents* have remained a constant proportion of household income**. This suggests a relationship, and realistically that is what you would expect, renting households will tend to find a rental that suits their total net income including wages, benefits as well as say interest. If a household income increases more than rents, then many tenants will seek a better standard of house at a higher price.

* Rents = geometric mean rent as published by MBIEwebsite every month

** Household Income = Stats Publish the sum of Wage and salary + Self Employment + "Government transfers” or benefits each year. 2019 is projected based on 4% growth as is typical over the last few years.

Affordability is often referred to as the purchase price of a home divided by average wages, but this just does not make sense. Many homes include multiple wage earners and may have benefits and odd jobs income.

Banks never compare a house price with your income to decide if you can afford a purchase. Banks ALWAYS compare the ability to pay interest and principal with the available household income of the proposed owner(s).

This comparison is true of the rental market, affordability is simply how much of your household income is going on rent. A study of this percentage using public data from MBIE and Stats has some surprising insights over 21 years (2019 is an estimate for household income, the stats to June 2019 are due in September):


Notice two key features of this chart:

  1. The proportion of rent has remained almost constant over 20 years for all regions with some minor changes here and there, usually returning to the long term average. This is especially so for the entire country, ie Rents are fixed to incomes in a narrow range between 19% and 22%.
  2. Auckland rents are 5% greater portion of income than all other cities. This is really just an indication that some areas have higher proportions than others, as you would expect to see in different suburbs, eg Te Aro should be higher than Taita. Unfortunately I cannot separate the different districts of Auckland.

Reviewing the whole of NZ, some smaller regions have very high rents compared to income, we can only guess why, eg Northland is likely due to low incomes on average, with high rents in expensive beach pockets, but I don’t know.


Close study shows a growth in Tauranga (Bay of Plenty), where the proportion has increased over 20 years from about 19-20% over time to almost 22%. Wellington on the other hand, where rents are now rising quickly, has come off a very low 18% in 2016 to catch up the the normal range of 19-20%, probably overshooting a bit due to shortages, reaching 24.4% this month.


Jonette 2011