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Nyberg, D., 2016, “House Prices, Household Debt, and Financial Stability Risks in New Zealand,” IMF Selected Issues Paper, IMF Country Report No. 16/40.
Hulchanski, J., 1995, “The Concept of Housing Affordability: Six Contemporary Uses of the Housing Expenditure-to-Income Ratio,” Journal of Housing Studies 10(4): 471–491.
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Prepared by Yu Ching Wong (APD). The chapter benefited from valuable comments by the Treasury of New Zealand and participants at a roundtable discussion including members of the Treasury, the Ministry of Business, Innovation and Employment, and the Reserve Bank of New Zealand.
Stats NZ estimates of households and dwellings by tenure show that the number of dwellings either rented or provided rent-free to occupants grew almost 23 percent between 2007 and 2017, while the total number of dwellings grew only 11 percent (MBIE, 2018).
Income after housing costs for the average New Zealand household is NZ$662 per week for a one-person household. This amount is adjusted for household size.
MBIE (2018) compared average wages of employees and median house prices to calculate the number of years at this wage required to purchase the median priced house. It showed that to the extent to which Auckland’s house prices have risen much faster than wages – it would require a rise from around ten years’ wages in early 2012 to 16 years in 2016 although with a slight easing more recently.
Further, based on more detailed data collected since Dec 2016, in 82 percent of all property transfers, one or more buyers were citizens or residents. Transfers in which none of the buyers being citizens or residents accounted for 2 percent (either at least one buyer had either a student or work visa or had immediate family with New Zealand citizenship/residency/work or student visa), whereas transfers which buyers are represented by corporate or business entities accounted for 16 percent. For transactions in Auckland, the share of transfers which buyers are not citizens or residents is higher at around 4 percent and transfers involving buyers that are corporate or business entities is about 20 percent.
RBNZ, 2018 Macroprudential Chart Pack, Chart 5D, March 2018.