Together

An affordable housing solution

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There’s a couple of different measures of housing affordability:

  1. Ratio of price to income (i.e. house price divided by income before tax).

  2. Percentage of income (before tax) required to own a house.

The target for these two measures are generally:

  • A ratio of less than 3.0 is a good target for “affordable”

  • Spending 20% - 30% of gross income on home ownership is “affordable”

So what does this look like in New Zealand?

In 2017, the median personal income from wages and salaries was $45,883 (before tax). The median household income from wages and salaries was $79,000 (before tax).

Using the target of a 3:1 ratio of house price to income, a house costing more than about $280,000 isn’t affordable for 50% of households.*

Using a target of 30% of income going to housing costs and making some simplifying assumptions about costs and equity** 50% of individuals cannot afford a house costing more than $212,500.***

So with a national median house price of $549,000, and just over $850,000 in Auckland (our largest city), how can we buy houses?

Try looking at it this way:

  1. A 20% deposit on a $550,000 house is $110,000, leaving $440,000 to be financed.

  2. An individual earning the median income of around $46,000 can afford a mortgage of $170,000 (using the same assumptions as earlier**).

  3. That means 3 individuals can afford to buy a house. You’ll need 4 in Auckland.

That’s how we do affordable housing: Together

*For an individual income the price would be around $138,000.

**Assuming mortgage has a 7% interest rate, 25 year term with bi-weekly payments, ignoring rates, insurance and maintenance costs etc, and assuming a 20% deposit is required.

*** For a household the price would be just over $370,000.

What's the hardest part?

The hardest thing about living together on this planet, in this city, on this street, is doing it together.

You could argue that doing life together is the point of life itself. We see to have forgotten this around here, at some point along the way..

Or maybe we've sold out. Maybe we live with the cry of "I don't need this in my life" ringing on in our ears. Maybe the pursuit of happiness just leaves us blinded by the shining light of our own dreams.

Somewhere along the way we've bought into the idea that we don't need to do the hard stuff, the tough journeys, the challenging conversations. We don't need to do the emotional labour of sharing our house, our street, our life with someone. 

It might be hard, but it's worth it.

And learning to life together, to work together, to share space together is only going to be more important.