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Home / Rotorua Daily Post

Even ‘middle class’ struggling to pay rent

RNZ
17 Mar, 2025 11:39 PM5 mins to read

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Narendra Modi calls for Christopher Luxon's support to address anti-India activities in New Zealand and Act reveals they are looking for candidates to run in local body elections.
  • A new housing development in Rotorua will offer homes at 80% of market rent for essential workers.
  • The project, led by Home in Place, aims to ease financial burdens for workers in sectors like nursing and education.
  • Economist Craig Renney highlighted that rising rents are outpacing wages, making it hard for “middle class” professions to afford housing.

By Susan Edmunds of RNZ

A new affordable housing development that will provide homes at 80% of market rent to essential workers highlights that even “middle class” people are struggling to cover basic costs, one economist says.

The Rotorua development of 58 homes has 28 designated affordable rental properties.

It is led by not-for-profit community housing provider Home in Place, in partnership with the Ministry of Housing and Urban Development and Watchman Capital through the Affordable Housing Fund.

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“Housing affordability is one of the biggest challenges facing our essential workers,” Home in Place chief executive Larissa Bridge said. “We need solutions that provide stability and security for the people who look after our health, educate our children, and respond in emergencies. This development is a direct response to that need.”

The three-bedroom homes are designed for “moderate-income” earners in sectors like nursing and education and will become available later this year.

Bridge said high rents could be a challenge for people working in those areas.

“While rents increase, the cost of living increases, unfortunately wages haven’t.”

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She said the market rent for similar homes, as set by Tenancy Services, was $650 a week, so they would be rented for $520, which would save tenants $6760 a year.

“It significantly eases the financial burden of the cost of living for those key workers who support the community of Rotorua.”

Some might be locals looking to upgrade their homes, she said, while others might be moving into the area.

FinCap senior policy adviser Jake Lilley said he had heard anecdotes from financial mentors who were shocked that people with “key roles” in communities struggled with the cost of living sometimes.

Council of Trade Unions policy director and economist Craig Renney said there were parts of the country where it would be relatively affordable to live on a teacher or nurse’s salary, but others where it was not.

“You’ve got a national pay scale but you have local challenges in housing markets,” he said. “Trying to be a new primary school teacher in Queenstown is much harder than in Masterton, for example.

“What this is identifying is the professions people previously considered well paid or at least middle-class can now struggle to pay rent.”

He said it was a result of rents rising faster than wages.

“If we want to build a cohesive community that has all the skills we want in there, teachers, doctors, nurses, then we either pay them more so they can afford to lead a decent life, or we provide housing and pay them more … the fact we’re having to have this conversation tells you something.”

But he said while it was useful to help “essential” workers, it would not be positive if there was a shift to saying that some people’s skills deserved special treatment while others didn’t.

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“Then you start making value judgments – the more we can supply good-quality housing in locations around the country, that’s great.”

Many of these roles could receive yet higher pay rates in Australia, he said.

Someone earning a teacher’s starting salary of $60,000 and living alone would spend 50% or more of their income in 25 regions of the roughly 65 in New Zealand, according to Corelogic data.

Home in Place's Rotorua development of 58 homes has 28 designated affordable rental properties. Photo / Home in Place
Home in Place's Rotorua development of 58 homes has 28 designated affordable rental properties. Photo / Home in Place

Someone earning $100,000 would spend 30% or more of their income in 25 regions.

Both teachers' and nurses' pay progresses on a scale that reaches about $100,000.

CoreLogic chief property economist Kelvin Davidson said renting was expensive at the moment.

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“Of course, given rents tend to be determined by tenants' income rather than landlords' costs, the current high starting point potentially suggests only limited scope for further rental growth in the near term.”

Financial coach Shula Newland said she had dealt with hardship applications from police wanting to access their superannuation savings.

“But everyone’s circumstances are different, normally people are struggling because of their circumstances. Those with investment properties are hardest hit as they got double mortgage increases.”

She said $30 an hour was now a “pretty typical low wage”.

“While rents increase, the cost of living increases, unfortunately wages haven’t.”

She said the market rent for similar homes, as set by Tenancy Services, was $650 a week, so they would be rented for $520, which would save tenants $6760 a year.

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“It significantly eases the financial burden of the cost of living for those key workers who support the community of Rotorua.”

Some might be locals looking to upgrade their homes, she said, while others might be moving into the area.

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