Who's got the most disposable income?

Who has the most disposable income in the country?

RNZ has crunched the data to look at which areas in New Zealand are left with the most in their bank accounts after they've covered the essentials.

The exercise is far from definitive, and everyone's individual circumstances will be different, but it gives an idea of the pressures in various regions.

Looking initially at the main centres, we've started with Infometrics' estimates for the year to December for median household incomes in each area.

We've deducted tax as if one person was earning that amount, for simplicity's sake.

Then we've deducted the average rates bill for that area, the cost of servicing a mortgage at 80 percent of the value of the area's typical home according to Cotality, the median cost of house insurance according to Consumer, a typical food spend according to Stats NZ, and the average local power bill.

We have kept the price of food consistent because data indicates relatively little variation between centres.

By this calculation, Wellington had the most disposable income at $42,211 a year. It had about the same household income as Auckland, and higher rates bills, but the cost of servicing a mortgage on an average value home was $10,000 a year lower.

Auckland's average disposable income with that calculation was $35,509.49 a year.

Then came Dunedin at $23,708 with the lowest household income of the main centres included in the survey but lower housing costs.

It was followed by Hamilton at $23,503.90 and Christchurch at $21,543.06.

Christchurch was weak by this measure because it had higher costs than Dunedin but median incomes were only a little higher.

According to Cotality, the lowest mortgage costs anywhere in the country were in the Grey District, where a typical new mortgage would cost $24,875 a year to service. Households there were earning $111,981 before tax, according to Infometrics.

Queenstown had the highest typical mortgage cost, at more than $100,000 a year in Queenstown's data. Affordability measures that compare local incomes to house prices tend not to be representative for this area because many houses are bought by people from outside the region.

Annual power bills were highest in Kerikeri and Porirua had the highest residential rates in the data - although not every council submitted.

The longest commutes in the country, which potentially means households with the largest fuel bills, were in Mackenzie District, where the median commute was 17.4km, according to economist Shamubeel Eaqub's data.

This does not reflect all the factors that can go into a household's budget. People who bought houses a long time ago may face much lower mortgage costs. Renters will be different again. Many households will have two people earning and contributing to their total income, so the after-tax income will vary.

But it shows that the experience of juggling costs is not uniform around New Zealand.

Infometrics principal economist Nick Brunsdon said in reality and in perception, some areas were definitely better off than others.

"This data shows that the biggest factor by far is income - it's no coincidence that the two areas with the highest disposable income also have among the highest household incomes. But we do need to consider what's required to achieve these incomes - in the bigger cities, a family might need two people working full time to earn enough to buy an average house. Compared to a similar family in a small town, the big city family might spend more on childcare and have less free time - which is where broader considerations around quality of life come into play."

He said it was notable there was a much wider range of housing costs than incomes.

"The highest household income area - Wellington City - has a household income more than two times higher than the lowest income area - Buller District. The highest housing cost area - Queenstown-Lakes - has an average house value over eight times higher than the lowest house value area - Wairoa. Unfortunately, the low hanging fruit have been taking advantage of already, so there's not many high-income areas next to low housing cost areas."

Brunsdon said there was a lot of pressure on households generally.

"Given mortgage rates are relatively low for the minute, it's a combination of a tough labour market and high inflation for essentials. With a tough labour market, more people are unemployed, it's hard to pick up more work, and wage inflation is low. Overall inflation of 3.1 percent isn't super high compared to the 7 percent-plus peak in 2022, but the cost of essentials like food, rates and energy are all much higher, and it's hard for households to avoid those cost increases."

Eaqub said different things would put pressure on in different ways. "Sometimes it's because rates are increasing, sometimes it's insurance risk has become higher. Sometimes it's because you just have to travel a lot. A small town where distances are vast... on the other side you've got more affordable housing that provides a counterbalance."

He said national-level statistics would always hide the experiences of individual communities.

Eaqub said some people were prompted to move to cheaper areas to give themselves more disposable income, but it could involve sacrificing some amenities.

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