Auckland tops income table as households earn more

Thursday, 19 October 2017

Households are earning 40 per cent more, on average, than they were 10 years ago.

New Zealand households now earn more than 40 per cent more than they were 10 years ago, Stats NZ says.

It has released new data that shows the average household income is now $98,621, up almost $30,000 compared to 2007.

There are bigger salaries in Auckland, but the cost of living is higher, too.

Over the same period, average annual housing costs increased from $10,658 to $16,057. That reflects lower interest rates, which reduced what existing homeowners paid on their mortgages, even as rising prices made it more expensive for new buyers.

Labour and income statistics manager Sean Broughton said that meant the ratio of housing costs to household income had not changed significantly.

* Auckland's high cost of living means there is little dignity for beneficiaries and low income residents

* Low income Wellington families choosing between food and public transport**

'Housing costs have been held in check by lower mortgage interest rates, which affected both floating and two-year fixed mortgages,' Broughton said.

Average mortgage interest payments were significantly lower for the June 2017 year, down 11.6 percent to $250.80 a week, from $283.70 a week for the year ended June 2016.

The average annual household income in Auckland has risen faster than anywhere else in New Zealand.

For the past four years, Auckland households have been raking in an average income of more than $100,000 a year.

This year, that ticked over $120,000 for the first time. That is compared to an average $113,701 in Wellington and $88,935 in Canterbury.

'Auckland has higher paying industries and occupations, for example, there are a lot more finance jobs,' economist Shamubeel Eaqub said.

Not only were there higher-paying industries, but they were also growing faster in Auckland, he said.

'There's something economists call the 'agglomeration benefit'.

'When you have a high population density, industries benefit and perform better.'

The majority of jobs in Auckland were in the private sector, whereas in Wellington many jobs were government-related, Eaqub said.

As for Christchurch, post-quake construction has peaked, and the economy lagged behind Auckland in size and scale.

Eaqub said head offices were increasingly likely to be in Auckland, and with them top executives with higher incomes.

'By the sheer number of people, Auckland has a much bigger talent pool, so it makes sense for offices to be co-located.'

Aucklanders received an average 2.4 per cent pay rise in in the last year, while wages fell 1.4 per cent in Wellington and 0.4 per cent in Christchurch, according to Trade Me Jobs figures.

Trade Me head of jobs Jeremy Wade put Auckland's high incomes down to a competitive job market and the cost of living.

ANZ in March estimated the job vacancy rate was at its highest point since 1994.

Wade said Trade Me had a record number of job listings for the last year.

'We've seen this change because Auckland's job market is extremely competitive, employers are struggling to find the people they need,' Wade said.

'Also, with Auckland's high cost of living, there is inevitably more pressure on wages than elsewhere in the country.'

Key sectors like construction were driving the change, Wade said.

Earlier this year, Trade Me saw a 21 per cent jump in the average salary for Auckland construction jobs from $82,000 to just under $99,000.

But Eaqub said while Auckland incomes were rising, so were people's expenses.

'The cost of living is higher than other places and rising faster – so Auckland workers have higher pay demands.'

About 31 per cent of all New Zealand households spent a quarter or more of their total income on housing costs last year, according to Statistics New Zealand.

Those costs included rent and mortgage, property rates and building-related insurance.

New Zealand Council for Trade Unions director of policy Bill Rosenberg said rising Auckland incomes could be related to the 'huge rise in house prices' in the city.

'Some families may want to make a deposit on a home or may have high mortgages, so they are working more hours and as a result have higher household incomes.

'There may also be a rise in the number of households with more than one person working,' Rosenberg said.

According to property information company QV, the average Auckland house price in September was $1,23 million compared to $606,322 in Wellington and $491,626 in Christchurch.