Housing costs hurting poor more than rich

Increasing income inequality is not at play in New Zealand, the report says, but housing costs impacts poor people more than rich. Photo / Brett Phibbs

New Zealand is not really suffering from an "inequality crisis" but instead a crisis of rising housing costs hurting the poor more than the rich, a think tank report says.

The New Zealand Initiative report, The Inequality Paradox, released on Tuesday, says overseas narratives about increasing income inequality - which had attracted a skyrocketing number of media reports in recent years - are not an issue here.

However, too many New Zealanders are suffering real hardship, largely due to very high housing costs, says executive director Oliver Hartwich.

"Rising house prices have made homeowners richer while those in poorer socio- economic groups are having to pay an increasing share of their income on housing," he said.

Income inequality and consumption inequality had remained broadly unchanged for the past 20 years, the report said.

In 1988 the poorest fifth of the population were paying less than 20 per cent of their income on housing, but were now paying more than 40 per cent.

However, the richest fifth were still only spending around 10 per cent of their income on their housing.

Government policies to address inequality in society should address the housing market, the report said.

Less restrictive housing policies could reduce hardship and economic equality.

Dr Hartwich poorer people spending more of their income on housing was causing real hardship.

"We feel strongly that a modern society and affordable housing do not have to be mutually exclusive, as long as the government is willing to act."