Auckland Household Income Drops

NZ Stats published annual Household income on Thursday, with some large changes to some of my assumptions developed with a HH income estimatefrom last year.

In particular, Auckland Household weekly income, excluding Self Employed, instead of rising as expected, reduced for the 2019 year from $1,867 to $1,866, not a lot while if I add Self Employed it dropped from $2,255 down to $2,251. It has never reduced annually since 1998. The only rise was in Government Transfers, ie Dole, Super, Benefit etc.

Meanwhile Wellington and Hamilton incomes increased exactly as I predicted for all regions, ie an increase of 4%.

Auckland Rents

With the lack of growth in Auckland Household incomes over the past year, the affordability of renting has reduced as rents continue to rise. Auckland has remained within the range it has adopted since 2006, endorsing my data showing that Auckland is not short of Private Rentals.

With rent/income in the middle of the range of 27.5-29%, there is not going to be pressure to raise rents above inflation or renovation impacts in Auckland anytime soon. I predict that rent rises will be hard to implement in 2019/20.

Wellington Rents

However, the opposite remains true in Wellington, where Rent/income is now known to be above 24%, the upper limit over the last 12 years. This will continue to put pressure on prices in Wellington.

An unexpected change is for Bay of Plenty. My forecast of income was from $1,521 to $1,581, but it only rose to $1,535, raising the rent/income ratio to over 27%, apart from Auckland, the highest regional ratio, helping to drag the National total up to almost 26%, the highest since 2004.

Rent Growth

Expect price rises above inflation in Wellington, Bay of Plenty and Hamilton, but that is obvious from supply shortages shown in my Regional Listings charts.

Auckland and Canterbury will continue to see rent rises below inflation, because they have plentiful supply and insufficient demand for private rentals. Will Auckland rent rises retract further to a YoY rate of zero?

Private Rents are growing at rates expected with current supply - demand imbalance/balance:

Note Private rentals exclude Subsidised public rentals such as Housing NZ, Corporates and NFPs - see here for that analysis

Jonette 2011