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Household Economic Survey (Income): Year ended June 2009
Embargoed until 10:45am  –  26 November 2009
Commentary

Revisions to 2007/08 Household Economic Survey (Income) data

Revisions have been made to some of the 2007/08 data released in the Household Economic Survey (Income): Year ended June 2008. The revisions affect income data, economic living standards index (ELSI) data, and tenure data. Revised figures are marked with an R in the ‘Tables’ section, but not in the ‘Commentary’ section. See the 'Technical notes' section for more details.

Notes for understanding the information in this ‘Commentary’

The Household Economic Survey (Income) is a shortened version of the full triennial Household Economic Survey (HES). HES (Income) runs 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 and no diary-sourced detailed expenditure information is collected. The HES (Income) collects housing costs information that includes expenditure on rent and mortgages, property rates, and building-related insurance. See 'Differences between the full HES and HES (Income)' in the 'Technical notes' section for more details.

HES (Income) has a relatively small sample size (4,500 households), and although survey results are adjusted for various demographic variables (age, sex, and region), there can be variability in survey estimates from one survey collection period to the next. This variability is because a different group of households is selected for each survey. The 2008/09 sample had a lower response rate than the 2007/08 sample and the population of New Zealand has increased since the 2007/08 survey. Together these have resulted in some surveyed households representing more of the population in 2008/09 than in previous years.

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

Data in HES (Income) is collected over a 12-month period beginning 1 July and ending 30 June the following year. To work out the current movements, the 2008/09 data is compared with the period 1 July 2007 to 30 June 2008. For more detail on the reference period, see the 'Technical notes' section.

Each household member aged 15 years or over was asked about their income for the year before their interview date. Income data collected using a twelve-month recall covers a two-year period (one year back from 1 July 2008 for people interviewed in that month, through to 30 June 2009 for people interviewed in the last month of the survey). Therefore, there will be some overlap with the previous HES (Income) data collected, which covered the two-year period 1 July 2006 to 30 June 2008.

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 by extreme high or extreme low amounts than averages.

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 the regional council areas of Auckland, Wellington, and Canterbury, and the combined regions of ‘Rest of the North Island’, and ‘Rest of the South Island’. This level of geographical breakdown is the lowest available for HES (Income) due to the sample design.

For more information, including definitions, see the 'Technical notes' section. 

Housing costs

Overall, average (mean) and median weekly expenditure on housing costs were unchanged from 2007/08 to 2008/09. Average weekly housing cost expenditure was $231 and median weekly housing cost expenditure was $156.

The housing costs result comprised an increase in property and ground rent payments, offset by decreases in mortgage principal repayments and mortgage interest payments. Between 2007/08 and 2008/09, for all households (including those that did not report expenditure), average weekly expenditure changed as follows:

  • property and ground rent payments increased $6 to $78 (up 8.1 percent)
  • mortgage principal repayments decreased $3 to $37 (down 7.1 percent)
  • mortgage interest payments decreased $2 to $80 (down 2.8 percent)
  • property rate payments increased $2 to $25 (up 6.4 percent). 

Mortgage interest payments made up the highest proportion of total housing costs (34.5 percent), followed by property and ground rent (33.9 percent). The main component of the mortgage interest payments category was interest payments on primary property, and the main component of the property and ground rent category was rent paid for primary property. 

Mortgage payments

Median weekly mortgage payments, for those making them, rose from $256 to $328 between 2006/07 and 2007/08, and declined to $312 (down 4.8 percent) in 2008/09. The decrease was mainly due to a fall 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 2008/09, 25 percent (120,000) of New Zealand households with a mortgage paid over $500 per week in mortgage payments, down from 28 percent (135,700) in 2007/08. These decreases partly reflect decreasing mortgage interest rates charged over the survey period.

For those making mortgage payments in 2008/09, the median weekly mortgage payments for the five regions were as follows:

  • Auckland – $414
  • Wellington – $340
  • Canterbury – $318
  • Rest of the North Island – $262
  • Rest of the South Island – $219. 

The varying mortgage payment amounts largely reflect the varying house prices in the different regions.

 Graph, Median weekly mortgage payments, by region, year ended 30 June.

Renting costs

In 2008/09, 31 percent of all households did not own the dwelling they lived in, and made rent payments. This figure is unchanged from the previous year. For households who paid rent, median weekly household expenditure on rent was $241 per week, up from $220 in the previous year (up 9.5 percent). Rent payments include rent paid for primary property, rent paid for other properties, and other payments connected with renting (ie bonds, administration fees, ground rent, and easements).

In 2008/09, for those who paid rent, 34 percent (177,200) paid over $300 per week in rent, up from 26 percent in 2007/08 and 21 percent in 2006/07.

Households in Auckland continued to pay the highest median rent, at $300 per week. This amount was $50 above the next-highest amount, paid by households in the Wellington region.

Median Weekly Rent Payments for those Making Rent Payments, by Region
Years ended 30 June
Region 2006/07
($)

2007/08
($) 

2008/09
($)
Auckland 280 280 300
Wellington 214 220 250
Rest of the North Island 169 181 200
Canterbury 192  212 245
Rest of the South Island 155  158 178
Total New Zealand 200  220 241


Housing costs to income ratios

An overall ratio of housing costs to household income is calculated by dividing aggregate housing costs for all households by aggregate income for all households. This ratio is often used as a measure of housing affordability. Some households may contribute to the housing costs aggregate but not the income aggregate, and other households may contribute to the income aggregate but not the housing costs aggregate. This measure includes households that do not make mortgage or rent payments.

Nationally, total housing costs accounted for 15.3 percent of total household regular income – a decrease from 16.1 percent in 2007/08 and 15.6 percent in 2006/07. Regionally, housing costs to household income ratios ranged from 12.9 percent for the Rest of South Island to 16.3 percent for Auckland.

Some households who rent could afford to service a mortgage, but choose not to for reasons that include lifestyle choices. However, those who pay rent tend to have lower incomes, on average, than those who own their dwelling. This means housing costs to income ratios can be higher for rent-paying households. On the other hand, 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.

Forty-four percent of households who did not own their dwelling spent 25 percent or more of their household income on housing costs, with 19 percent spending more than 40 percent of their income on housing costs. In contrast, 19 percent of households that owned the dwelling they lived in or held that dwelling in a family trust, spent 25 percent or more of their household income on housing costs, with 6 percent spending 40 percent or more.

Income

Household income

Results for annual household income from all regular sources for 2008/09 were as follows:

  • median annual income was $63,867, up 8.5 percent from $58,888 in 2007/08
  • average (mean) annual income was $78,876, up 5.6 percent from $74,658 in 2007/08.

The change in household income was driven by an increase in aggregate wage and salary income, which was slightly offset by a decrease in self-employment income. ---PDF BREAK---

Average Annual Household Income by Income Source
Year ended 30 June 2009
Household income source  2008/09 Change from 2007/08
Average annual household income
($)
Proportion of total income (%) ($) (%)
Wages and salaries 57,511  73 3,768 7.0
Self-employment  4,476  6  -699  -13.5
Investments  4,901  6  541  12.4
Private superannuation  698  1  -136  -16.3
New Zealand Superannuation and war pensions  4,525  6  271  6.4
Government benefits  3,687  5  78  2.2
Other sources  3,078  4  394  14.7
Total regular income  78,876  100  4,218  5.6

Note: All figures in this table are independently rounded. 

Annual median household wage and salary income was $46,000 in 2008/09, up 7.0 percent from $43,000 in 2007/08.

Of all household income sources, wages and salaries showed the highest average dollar increase from 2007/08 to 2008/09, with a rise of $3,768, to reach $57,511 (up 7.0 percent). Wages and salaries continued to make up the highest proportion of total household income in 2008/09, with 73 percent.

Self-employment showed the second-highest dollar change in average annual household income between 2007/08 and 2008/09, with a drop of $699 (down 13.5 percent).

Of the five regions, Wellington region had the highest median annual household income in 2008/09, at $73,027, followed closely by Auckland with $71,463. The lowest median annual household income was for the Rest of the North Island ($58,000).

Personal income

For those aged 15 years and over, results for annual personal income from regular sources (including those who received no income) were as follows:

  • median personal income increased 7.9 percent from $28,000 in 2007/08 to $30,224 in 2008/09
    • for females, the increase was 9.4 percent – from $21,915 to $23,970
    • for males, the increase was 6.8 percent – from $35,263 to $37,656.
  • average (mean) personal income increased 5.6 percent from $36,146 in 2007/08 to $38,162 in 2008/09
    • for males, the increase was 6.4 percent – from $44,155 to $46,995
    • for females, the increase was 4.3 percent – from $28,628 to $29,854.

The main driver of the increase in average annual personal income from regular sources was an increase in aggregate wage and salary income, coupled with a decrease in the numbers of those receiving wage and salary income.

Wages and salaries

For those receiving income from wages and salaries, the median annual personal income from this source increased to $37,543 in 2008/09 (up 7.3 percent from $35,000 in 2007/08).

Average (mean) annual wage and salary income (for those receiving income from this source) was $43,161 in 2008/09, up 9.2 percent from $39,517 in 2007/08. The rise was due to an increase in the aggregate amount of wage and salary income received (up 8.2 percent), coupled with a decrease in number of people receiving income from this source (down 1.0 percent or 20,900 people). Fewer wage and salary earners were in the lower three quintiles in 2008/09 compared with 2006/07 and 2007/08, and more were in the upper two quintiles. This change has contributed to increases in both the mean and median wages and salary income. Wage and salary income includes income received from redundancies and bonuses. Increases in these forms of income also contributed to the overall increase in wage and salary income.

Graph, Number of wage and salary earners, by quintile income ranges, year ended 30 June.

For those receiving income from wages and salaries, males had an increase in average wage and salary income of 8.7 percent (up $4,106) and females had an increase of 9.6 percent (up $3,026).

Average annual wage and salary income (for those receiving income from this source) increased for all the ten-year age groups. However, numbers of wage and salary earners decreased for all the ten-year age groups up to 44 years inclusive.

Graph, Number of wage and salary earners, by age group, year ended 30 June.

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 2008/09, most people were either satisfied or very satisfied with their material standard of living: 

  • 74 percent of households were satisfied or very satisfied, with 20 percent being very satisfied
  • 9 percent were dissatisfied or very dissatisfied
  • the remaining 16 percent were neither satisfied nor dissatisfied.

Graph, Household satisfaction with material standard of living, year ended June 2009.

Households were also asked how they rated their current level of material standard of living. The majority of New Zealand households (92 percent) rated their current level as either medium or above (medium, fairly high, or high).

Fifty-one 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 $43,900, 34 percent reported that their income was enough or more than enough to meet their everyday needs. This result contrasts with households with a total income of $86,700 and over, where the proportion was 70 percent.

 Graph, Adequacy of income to meet everyday needs, year ended 30 June 2009.

Next release ...

Household Economic Survey: Year ended June 2010 will be released in November 2010.

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

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