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Household Economic Survey (Income): Year ended June 2014
Embargoed until 10:45am  –  27 November 2014
Commentary

All income and expenditure changes in this commentary are statistically significant unless otherwise specified.

All income figures in this information release refer to gross (before tax) income.

Overview

Between the two years ending 30 June 2012 (2011/12) and 30 June 2014 (2013/14):

  • average annual household income from regular sources increased by 9.1 percent (from $81,227 to $88,579).
  • average weekly expenditure on housing costs increased by 11.1 percent (from $256 to $284).

Due to household expenditure increasing more than household income, the housing-costs-to-income ratio also increased. This meant that, on average, for the year ended 30 June 2014, 16.3 percent of a household's income was spent on housing costs.

The change in average annual household income over the two years was due to average annual personal income increasing from $41,639 to $45,491 (up 9.3 percent), for those aged 15 years and over. Contributing to this increase were rises in income from wages and salaries, and for New Zealand Superannuation and war pensions.

We have mainly compared the current household income and expenditure figures with the 2011/12 HES (Income) rather than the 2012/13 HES – due to differences in the level of detail collected in the expenditure questionnaires asked in the two surveys.

See data quality for more information about the differences between the two collections. 

Incomes increase

Note: All income figures relate only to people and households reporting that source of income.

Household income

Change over one year: From 2012/13 to 2013/14, average annual household income from total regular sources increased by 3.5 percent, from $85,588 to $88,579. This change was not statistically significant. The number of households receiving:

  • less than $32,100 annually rose by 2.9 percent (the lowest quintile in 2012/13)
  • more than $123,300 annually rose by 14.7 percent (the highest quintile in 2012/13).

Change over two years: From 2011/12 to 2013/14, average annual household income from regular sources increased from $81,227 to $88,579 (up 9.1 percent). This change was mainly due to increases in:

  • wage and salary income, up from $82,029 to $88,357 (7.7 percent).
  • New Zealand Superannuation and war pensions, up from $22,342 to $23,654 (5.9 percent).

Personal income

Change over one year: From 2012/13 to 2013/14, average annual personal income from regular sources increased by 2.4 percent, from $44,426 to $45,491. This change was not statistically significant.

Change over two years: From 2011/12 to 2013/14, average annual personal income from regular sources increased from $41,639 to $45,491 (up 9.3 percent). This change was driven by increases in:

  • wage and salary income, up from $46,169 to $49,396 (7.0 percent). This change was partly due to minimum wage increases, up 11.8 percent from 2010 to 2014
  • New Zealand Superannuation and war pensions, up from $16,276 to $17,213 (5.8 percent). From 2011/12 to 2013/14, the number of people receiving this source of income increased 9.4 percent. Over the four years, adjustments were made to New Zealand Superannuation and war pension payments, with increases of 4.66 percent in 2010, 4.40 percent in 2011, 2.65 percent in 2012, and 2.44 percent in 2013.

Housing costs increase

Note: All household expenditure figures relate only to households reporting that expenditure.

Housing costs include expenditure on rent and mortgages (both principal and interest payments), property rates, and building-related insurance.

From 2011/12 to 2013/14, average weekly expenditure on housing costs increased from $256 to $284 (up 11.1 percent).

Mortgage payments

Mortgage payments include principal repayments and interest payments, as well as application and service fees.

For the year ending 30 June 2014, mortgage payments contributed 45 percent of total housing costs.

From 2011/12 to 2013/14, average weekly mortgage costs increased from $357 to $389 (up 9.1 percent). This was due to a 14.8 percent increase in expenditure on principal repayments, as well as a non-significant increase of 5.9 percent on interest payments.

Graph, Proportion of mortgage expenditure spent on principal and interest payments, year ended 30 June 2007 to 2014.

Rent

Rent payments include rent paid for primary property, that paid for other properties, and other payments connected with renting such as rental bonds, administration fees, ground rent, and easement.

From 2011/12 to 2013/14, average weekly rent payments increased from $273 to $290 – a statistically non-significant increase of 6.3 percent. Contributing to this change was an increase in average rent payments in the Canterbury region. Average weekly household spending on rent was highest in Auckland ($353), followed by Wellington ($308).

Rates

Property rates include water rates and charges, local and regional authority rates for primary property and other properties, and other payments to local authorities.

From 2011/12 to 2013/14, average weekly spending on property rates increased from $42 to $47 (up 12.5 percent). Spending on rates was highest in the Auckland region ($52) followed closely by Wellington region ($51).

Building-related insurance

Building-related insurance includes insurance on buildings, and on combined policies that may also include house contents and vehicles.

From 2011/12 to 2013/14, average weekly household spending on building-related insurance increased from $19 to $26 (up 36.1 percent). Many insurance providers made changes to home insurance policies during 2012 and 2013. These included increasing insurance premiums, as well as insuring homes for a ‘maximum specified amount’ rather than ‘total replacement cost’.

Housing costs rise more than income

The housing-costs-to-income ratio is calculated by dividing total housing costs for all households by total regular income for all households. It is often used as a measure of housing affordability.

In 2013/14, total housing costs accounted for 16.3 percent of total household income from regular sources. This compares with 15.4 percent in 2012/13, and 16.0 percent in 2011/12. The increase in the ratio for 2013/14 was largely due to average annual housing costs increasing by 8.6 percent, while average annual household income increased non-significantly (3.1 percent).

For households that owned or partly owned their dwelling, 14.1 percent spent 30 percent or more of their total household income on housing costs. For households that did not own their dwelling, 34.2 percent spent 30 percent or more of their total household income on housing costs.

Note: The numbers for those who own, or partly own, their dwelling include those who have paid off their mortgage and thus have reduced housing costs.

 

 

Life satisfaction and adequacy of income

One person 18 years or over in every household was randomly selected to complete an additional questionnaire on behalf of the household. This person was asked questions that included:

  • how satisfied they were with their life at the time of the interview
  • how adequately their household income met their everyday needs.

Life satisfaction

In the year ended 30 June 2014:

  • 80 percent of respondents said they were satisfied or very satisfied 
  • 6 percent of respondents said they were dissatisfied or very dissatisfied 
  • 13 percent of respondents said they were neither satisfied nor dissatisfied.

Graph, Life satisfaction, year ended 30 June 2014.

Adequacy of income

Respondents were asked how well their total income meets their everyday needs for accommodation, food, clothing, and other necessities.

  • 58 percent of respondents reported their income was enough or more than enough to meet their everyday needs.
  • 41 percent of respondents said that their income was just enough or not enough to meet their everyday needs.

For households where total income was less than $31,900, 63 percent of respondents said their income was not enough or only just enough to meet their everyday needs. For households where total income was greater than $131,700, 16 percent of respondents said their income was not enough or only just enough to meet their everyday needs.

Graph, Adequacy of income to meet everyday needs, by annual household income quintile, year ended 30 June 2014.

For more detailed data, see the Excel tables in the 'Downloads' box.

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