Source: Child Poverty Action Group
The Child Poverty Action Group (CPAG) is calling for better monitoring of housing stock, particularly private rentals, as new research reveals the overall stock of available affordable rental housing declined over the past five years relative to population growth.
Rental supply is rarely monitored; governments typically focus on house supply for sale, sometimes demand (household growth) and its relation to prices.
In the first study of its kind in New Zealand, this series of papers provides new analysis of rental housing affordability and availability to provide a more complete picture of today’s private rental market.
This evidence suggests the share of affordable private rental housing shrunk by between 1 percent and 5 percent between 2018 and 2023; whereas population grew by 8 percent.
CPAG says the research highlights the need to increase public rentals.
The research for CPAG has been carried out by Greg Waite, a former policy analyst with the Queensland Department of Public Works, now residing in Northland who warns: “Without big changes, future generations will be much worse off as unaffordable renting replaces affordable home ownership for more young families and more retirees.”
Unlike current research, where affordability is measured by rents less than 30 percent of a household’s income, the new research looks in detail at whether a household’s income is sufficient to cover costs.
In response to unaffordable housing, we have seen ongoing adaption in the rise of shared housing, the increasing hours worked by primary carers of children, the decline in the number of children per family, and the rise in intergenerational housing and childcare assistance, he added.
“Rising rents and falling home ownership signal that we need to do more than just adapt to market trends,” Mr Waite said.
“The ongoing failure to deliver affordable private rental makes a strong case to focus new spending on longer term solutions such as social housing, incentives to build new affordable housing, and shared equity rental, rather than short term rent subsidies.”
While the first objective of these benchmarks is to monitor whether the share of affordable rental is rising or falling, they can also be used to define targeted incentives for construction of low-cost homes by private, partnered or non-profit organisations.
At present, Aotearoa New Zealand is last in the OECD’s rental affordability rankings and our population is growing faster than our supply of affordable rental homes.
This is felt hardest by lower income families where six out of every seven households receiving a benefit in 2021 could not afford their rented homes and a basic standard of living.
In June 2021, singles and couples receiving the Jobseeker benefit faced the largest weekly income shortfall at 37 percent and 36 percent of income respectively, with couple parents on the Jobseeker Benefit close behind with a weekly shortfall of 33 percent.
These households need large increases in support payments ($157, $240 and $323 respectively) to afford the basic standard of living recommended by the 2019 Welfare Expert Advisory Group, whose 42 recommendations to overhaul the welfare system have largely been ignored by the government.
CPAG’s research found that the national stock of private rental homes grew by six percent but the total affordable stock at the benefit, low income and median income benchmarks changed by -3.5 percent, 1.4 percent and 1.6 percent. Population growth across the same period was 8 percent.
To create enough new affordable rental homes to make a difference, we will need an expanded public debate and a new commitment to state funding and partnerships with communities and iwi.
“Our current market-driven policies are steadily moving us towards a more difficult future where more and more families will be forced to adjust to unaffordable renting throughout their working lives and into retirement,” he said.