Houses major passive income

Houses earned more than people in every region but one of New Zealand, on a median price and income basis, over the year to October.

In all regions for which there is data available, with the exception of Canterbury, median house prices increased by more in the year to October than a median worker in that area earned in the year.

In Auckland, the median employed person earned $66,404, according to Statistics NZ. The median house price increased by

$140,000 in the 12 months. Meanwhile in Wellington, the median income was $68,952 and the median house price increase

$135,000.

For Canterbury, the median income was $60,632 and the median price increase $45,000. Waikato’s median $61,256 income was well below the median house price increase of $90,000.

Economist Shamubeel Eaqub said the speed with which house prices were moving ahead of incomes made it much harder for people to get into the market.

Although low interest rates

make the cost of borrowing money less, the amount people had to save to get in the door and access those home loans was increasing quickly.

Eaqub said houses had been relatively affordable outside the main centres in 2013 but this was no longer the case.

‘‘The infection has now spread to many other parts of the country ... we’re exporting city problems to the rest of New Zealand. The consequences there are much worse because the income potential is not even there.’’

He said people in cities with high prices had the option of moving to other areas. But when everywhere was expensive, there was nowhere to go. ‘‘If you’re gentrified out of Wairoa, where do you go? People think it’s an Auckland or a Wellington story but it’s spreading and affecting many parts of New Zealand.’’

The houses being built were not intended for the people who were really struggling, he said.