Household Economic Survey (Income): Year ended June 2008

Introduction to the new survey

The Household Economic Survey (Income) is a shortened version of the full triennial Household Economic Survey (HES). The year ended 30 June 2008 is the first time this survey has been run. The survey will run in the two intervening years between the full HES to collect data on household and personal income, living standards and housing cost expenditure. The main differences between the two surveys are that in HES (Income), the only expenditure data collected relates to some types of housing costs; also, there is no diary-sourced detailed expenditure information. Housing costs information collected from HES (Income) includes expenditure on rent and mortgages, property rates and building-related insurance.

Notes for this release

The information in this release is for the year ended 30 June 2008 (referred to as 2007/08), with comparisons to data collected from the full HES in the year ended 30 June 2007 (2006/07). Housing cost expenditure from 2006/07 has been adjusted to remove the diary-sourced expenditure, making it comparable with data collected in 2007/08. This is indicated by an R in the tables for 2006/07 data.

When interpreting information from HES (Income), all factors impacting on the data must be considered. Factors influencing a household's expenditure or income include household size, household composition, geographic location, and employment-related factors.

The median figure means half of the households receive or spend more and half receive or spend less than the stated amount. Medians tend to be less influenced than averages by extreme high or extreme low amounts.

All income figures refer to gross (before tax) income, and housing cost expenditure includes GST where applicable.

The five broad regions reported on are based on regional council areas. They are the Auckland, Wellington and Canterbury regional council areas, Rest of the North Island, and Rest of the South Island. This is the lowest level of geographical breakdown available for HES (Income) due to sample design.

More information, including definitions, can be found in the Technical notes section of this release

Income

Household income

The median annual household regular income for 2007/08 was $57,947, up 3.9 percent from the 2006/07 figure of $55,796.

The average (mean) annual income from regular sources for New Zealand households was $73,952 in 2007/08. This was an increase of 8.8 percent, up from $67,973 in 2006/07.

Note: All figures in this table are independently rounded.

Annual median household wage and salary income was $43,000 in 2007/08, up from $41,205 in 2006/07 (up 4.4 percent).

Wages and salaries was the income source with the highest average annual household income dollar increase between 2006/07 and 2007/08. It was up $3,508 to reach $53,743 (up 7.0 percent). Wages and salaries continued to make up the highest proportion of total household income in 2007/08, with 73 percent.

Investment income had the second-highest average annual household income dollar increase between 2006/07 and 2007/08, at $1,303. However, investment income makes up only a small proportion of total household income, at 6 percent. The increase in investment income is explained by increases in the aggregate amount of investment income, the number of households that received investment income, and an increase in the number of household members within the age groups who typically receive this income source. Just over half of the increase in the number of investment income recipient were aged 55 years or over.

Only the change (8.8 percent) for average annual household total regular income was statistically significant.

Of the five regions, Auckland region had the highest median annual household income in 2007/08, at $70,993, followed closely by Wellington with $69,918. The lowest median annual household income was for the Rest of the North Island ($50,295), but this region had the largest percentage increase in income since 2006/07, at 11.8 percent. The Rest of the North Island region has the largest number of households of all five regions.

  

Personal income

For those aged 15 years and over, median annual personal income from regular sources was $27,606 in 2007/08, up from $25,367 in 2006/07 (up 8.8 percent). The increase in median annual personal income was 6.6 percent for males ($33,000 to $35,164), and 5.6 percent for females ($20,085 to $21,220).

Average (mean) annual personal income from regular sources was $35,804 in 2007/08, up from $32,833 in 2006/07, a 9.1 percent increase. For males, average annual regular income increased 11.5 percent, up from $39,491 in 2006/07 to $44,038 in 2007/08. For females, it increased 5.6 percent, up from $26,593 in 2006/07 to $28,075 in 2007/08. Over the year, wages and salaries, the key component of income, increased for both males and females.

Wages and salaries

For those receiving income from wages and salaries, the median annual personal income from this source increased to $35,000 (up 2.9 percent) in 2007/08.

Average annual wage and salary income for those receiving income from this source was $39,517, up 5.3 percent from $37,546 in 2006/07. The rise was due to increases in the aggregate amount of wage and salary income received (up 8.5 percent) and the number of wage and salary income earners (up 3.1 percent). Males had an increase in average wage and salary income of 5.1 percent (up $2,277) and females had an increase of 4.8 percent (up $1,434).

Income by age group

For those receiving regular income, the 40- to 44-year age group had the highest dollar increase in median annual regular income, between 2006/07 and 2007/08, at $7,691 (up from $34,023 to $41,714). They were followed by the 60- to 64-year age group, with an increase of $5,202 (up from $23,998 to $29,200). Wage and salary increases for these two age groups were the main contributor to their overall increases in regular income.

The dollar increase for median annual wage and salary income, for those receiving income from this source, was highest for the 60- to 64-year and 40- to 44-year age groups, with increases of $7,839 (up to $39,350), and $6,500 (up to $42,500), respectively. For 2007/08, compared with 2006/07, the number of people in the 60- to 64 year age group who received wage and salary income increased by 14.5 percent (up to 121,600 people). The 40- to 44-year age group increased by 2.8 percent (up to 252,600 people).

 

Housing costs

Housing costs information collected in this survey includes expenditure on rent and mortgages, property rates and building-related insurance. Median weekly expenditure on housing costs rose from $130 in 2006/07 to $156 in 2007/08 (up 20.1 percent), while the average (mean) weekly housing cost expenditure rose 12.8 percent, from $204 in 2006/07 to $230 in 2007/08. The change in housing costs was driven mainly by mortgage interest payments. Average weekly mortgage interest payments were $82 for 2007/08, up $18 (28.8 percent) from 2006/07. This was a statistically significant increase. Property and ground rent also had a significant increase in average weekly expenditure (up 13.6 percent, from $64 to $73)

Note: All figures in this table are independently rounded.

Housing costs to income ratios

Ratios of housing costs to household income are often used as measures of housing affordability. Nationally, total housing costs accounted for 16.2 percent of total household regular income, a slight increase from 15.6 percent in 2006/07. There was little difference in the housing costs to household income ratio regionally, although Canterbury (17.5 percent) and Auckland (17.4 percent) were slightly higher than the remaining regions.

Some households who rent can afford to service a mortgage but may choose not to for reasons that include lifestyle choices. However, on average, those who pay rent tend to have lower incomes than those who own their dwelling. Therefore, the resulting housing costs to income ratio can be higher for rent-paying households. Also, some home owners do not have mortgages owing for their dwelling, and so their regular housing cost commitments tend to be lower than those who do pay a mortgage.

For households that either owned the dwelling they lived in, or held that dwelling in a family trust, 21 percent of them spent 25 percent or more of their household income on housing costs. This is an increase from 18 percent of households in 2006/07. In contrast, 49 percent of households who paid rent spent 25 percent or more of their household income on housing costs, with 22 percent spending more than 40 percent of their income on housing costs.

Mortgage payments

For those making mortgage payments, median weekly mortgage payments rose from $256 to $328 between 2006/07 and 2007/08, an increase of 27.8 percent, due mainly to an increase in mortgage interest payments. Mortgage payments include interest payments, principal repayments, interest on revolving credit mortgage/loans, and application and service fees for mortgages.

In 2007/08, 28 percent (135,700) of New Zealand households with a mortgage paid over $500 per week in mortgage payments, up from 18 percent (86,300) in 2006/07. Just over 37,200 households (8 percent) paid over $800 per week in mortgage payments, up from 22,300 (5 percent) in the previous year. These increases partly reflect increasing mortgage interest rates charged over the survey period.

For 2007/08, the median weekly mortgage payments for the five regions were as follows: Auckland ($472), Wellington ($350), Canterbury ($307), Rest of the North Island ($262), and Rest of the South Island ($242). This largely reflects the higher median house prices in the Auckland regional council area, compared with the rest of the country.

 

Renting costs

In 2007/08, 31 percent of all households did not own the dwelling they lived in, and made rent payments. For these households, median weekly household expenditure on rent was $225 per week, up from $210 in the previous year (up 7.1 percent). Rent payments include rent paid for primary property, rent paid for other properties, and other payments connected with renting – ie bonds, ground rent and easements.

Material standard of living

Material standard of living is defined as the capacity to obtain the things that money can buy. Questions on material standard of living asked people how they rated their standard of living, how satisfied they were with their standard of living, and how adequately their income met their everyday needs.

In 2007/08 most people were either satisfied or very satisfied with their material standard of living. Seventy percent of households were satisfied or very satisfied, with 20 percent being very satisfied. Twelve percent were dissatisfied or very dissatisfied, and the remaining 18 percent were neither satisfied nor dissatisfied.

 

As well as stating how satisfied they were with their standard of living, households were asked how they rated their current level of material standard of living. The majority of New Zealand households (88 percent) rated their current level as either medium or above (medium, fairly high, and high).

Forty-five percent of all households reported that their income was enough or more than enough to meet their everyday needs for such things as accommodation, food and clothing. For households with a total income of less than $41,100, 32 percent reported that their income was enough or more than enough to meet their everyday needs. This compares with households with a total income of $98,000 and over, where the proportion was 72 percent.

 

For technical information contact:
Adele Dunleavy or Ann Ball
Wellington 04 931 4600
Email: info@stats.govt.nz