New Zealand has been at the forefront of a global phenomenon. Photo / 123RF
New Zealand has been at the forefront of a global phenomenon. Photo / 123RF
In Taranaki, pay increases have just about kept up with house prices. In Auckland, workers are far behind.
Taranaki has come out tops as the region where the rate of wage growth has best kept up with the increase in house prices.
Analysis by the Weekend Herald shows median weeklyearnings in the Taranaki region grew 19.88 per cent to $959 during the four years from June 2013 to June 2017, while the average house price grew 20.3 per cent to $285,967.
That compares with the Auckland region - the worst performer on this measure - where wage growth was just 14.51 per cent to $1010 a week, compared to house price growth of 63.45 per cent to $1.05 million.
Nationwide median wage growth was 14.71 per cent across the four-year period to $959, compared to average house price growth of 44.83 per cent to $639,051.
The ASB Regional Economic Scorecard - which measures performance based on employment, wages, house prices, retail sales, new car sales and construction - has placed the region near the bottom of its rankings.
In 2016 it was the lowest ranked region as it suffered from the slumps in the dairy and oil and gas sectors, which dominate its economy.
Other regions where wage growth has also maintained some proximity to house price growth include Southland (where house prices rose 19.6 per cent compared to wage growth of 14.27 per cent), Canterbury (housing up 23.1 per cent and wages 14.05 per cent) and Manawatu/Wanganui (housing up 25.35 per cent and wages up 15.07 per cent).
Taranaki's rate of wage growth has best kept up with the increase in house prices. Photo / Mark Mitchell
Meanwhile, in Auckland and other upper North Island regions the disparity between wage growth and house prices clearly illustrates the problem for those attempting to grow wealth based entirely on weekly earnings.
After Auckland, the regions with the greatest gap between house price growth and median wage growth were the Waikato (house prices grew at 51.66 per cent and wages just 14.9 per cent), Bay of Plenty (51.37 per cent and 12.48 per cent) and Northland (48.73 per cent and 12.96 per cent).
All of these regions have experienced migration from Auckland and increased investor interest as Auckland property prices peaked.
Wage growth has become the focus of intense scrutiny in economics in the past few years as it failed to accelerate as employment rates have recovered in the wake of the global financial crisis.
Unemployment in New Zealand is sitting at 4.8 per cent - which economists regard as near to full employment, from a practical point of view.
New Zealand's employment rate - the proportion of working-age people in a job - is sitting above 66 per cent, which is higher than the country's major trading partners.
But despite that, wages remain nearly static, rising by just 1.6 per cent in the year to March 2016 and 1.7 per cent in the year to March 2017.
Assets (property and shares), on the other hand, have soared in value as record low interest rates have pushed investors to seek alternatives to bank deposits.
The rapid rise in sharemarkets and property prices has been a global phenomenon, of which New Zealand has been at the forefront.
From June 2013 to June 2017, New Zealand's NZX50 sharemarket index soared by 67.3 per cent.
The Weekend Herald analysis compared the rise in property values - as measured by Quotable Value - in the same areas which Statistics NZ uses to track regional growth.
