Housing affordability View this page in the refreshed REP

Affordable housing is important for people’s well-being. For lower-income households, high housing costs relative to income are often associated with severe financial difficulty, and can leave households with insufficient income to meet other basic needs such as food, clothing, transport, medical care and education. High outgoings-to-income ratios are not as critical for higher-income earners, as there is sufficient income left for their basic needs.

This section investigates the affordability of housing in the Nelson-Tasman and for the country as a whole by comparing average current house valuesi with mean household income. We present a housing affordability index which is the ratio of the average current house value to average household income. A higher ratio, therefore, suggests that median houses cost a greater multiple of typical incomes, which indicates lower housing affordability. We also present the proportion of average household income that would be needed to service a 20 year mortgage on the average house value, with a 20% deposit at average 2-year fixed interest rates.