The Cost of Living
Tags: Cost Of Living, Income, New Zealand, Coliving

It is getting expensive to carve out and create a good life for ourselves in New Zealand.

Take Auckland, the biggest city in New Zealand, where living costs have been rising markedly within the last ten years. A household in Auckland will have $233 a week less spare money compared to Wellington, and $220 less than in Christchurch, as conducted by a PWC study.

Clearly, housing and mortgage costs are a big issue in Auckland too. If you were to move there today, you’d have to pay nearly twice the amount for a median-price house and have to work through 15 percent more in mortgage repayments, compared with ten years ago.

PWC consultants, in their study on which Australiasian city were the most attractive to skilled talent, also noted those kiwi cities were also worse off than Australia’s best economically performing cities — Perth, Brisbane and Adelaide.

The study compared the income rise rates in each city with the rising costs of living, focusing on factors such as housing, food, transport and taxes. The Consumer Price Index (CPI) noted transport costs rose by 5.6% over 2018 and housing and utility costs increased by 3.1 percent.

The problem is the escalating living costs exceeding the growth of our incomes. We are not earning enough to pay all the bills. Although, wages have been increasing, for example over 2018, wages were up by 2.4 percent as indicated by the CPI, they are not adjusting efficiently to the cost of living.

Since 2012, Auckland’s discretionary income has only been decreasing. The Council of Trade Union’s 2019 survey on cost of living and income found just over 70 percent of respondents were unhappy with their incomes, feeling they weren’t keeping up with the increasing cost of living.

Each year, The Economist creates a list of the world’s most livable cities, an intelligence unit ranking 30 factors arranged within five broad categories — stability, culture, education, environment, healthcare and infrastructure. Each year Auckland has been moving down the list — at number 12 last year compared to eight the year before. Although Auckland’s economy is growing, the per-capita growth productivity remains extremely low at one percent. This is a nationwide issue as well.

So what are the solutions?

PWC’s chief economist, Geoff Cooper, said a holistic view needs to be taken of urbanism, with living costs looked at more comprehensively. He recommended an “all-of-government Economic Competitiveness Agenda,” which can address all the challenges confronting Auckland, from sustainability to quality of life. The key being lower living costs paired with increasing wages, and proactively dealing with labour shortages.

In generating sustained and increased income growth, Cooper said a “toolkit’ is needed. This comprised of policies which encourage greater city centre intensification, flexible zoning, building for scale and investing in a skilled and creative workforce.

Alongside this, a human capital approach is needed. He suggested national collective agreements based on pay, such as for police, nurses and teachers, need to be re-designed to adapt to the differing regional living costs, otherwise shortages will begin to emerge.

Other solutions are emerging too, such as the coliving movement growing on New Zealand shores. Space10, Ikea’s future-living lab, began their ‘One Shared House 2030 Survey’ last year with 7000 participants so far from 147 countries. Of this survey, every single respondent has been willing to take part in shared living. Not only is life made more affordable by coliving but it provides a platform for companionship.

How are you balancing the cost of living?