One in four renters already at the limit — now it's the government's new minimum
New Zealand's longstanding 30% rule for housing affordability is back in the spotlight ahead of the 2026 budget — and for many renters, it is no longer a ceiling but an uncomfortable reality.
Stats NZ data from the 2023 Census shows that 26.5% of renting households were already spending at least 30% of their income on rent, up from 26% in 2018 and 24.2% in 2013. Of those, 18.3% were spending 40% or more, and 12.8% were committing half their income or more to rent — proportions that have held steady since 2018.
The debate has been sharpened by a government policy change lifting social housing tenants' rent contribution from 25% to 30% of income — leaving around 84,000 households approximately $30 worse off each week. An accommodation supplement increase of $15 for 111,000 low-income private renters provides some offset, though critics argue it falls well short, RNZ reported.
The timing is significant. The national median weekly rent rose for the first time this year in April, climbing $5 to $625 — the first monthly increase since November 2025 — according to the Trade Me Property Rental Price Index. With rental supply down 5% year-on-year and demand up 8%, Trade Me warned further price rises are likely in the months ahead.
Why 30% is more complicated than it looks
Infometrics principal economist Nick Brunsdon (pictured left) argues the 30% benchmark carries real analytical value — but only if applied with care. The figure has historical grounding, Brunsdon said, but its usefulness as a hard line depends entirely on income level.
"We often use the 30% rule as a benchmark over time — how many households are paying more than 30%, and how has this grown over time? But that's taking it as a line in the sand, not saying that people paying 29% of income on housing costs are a-okay," he said.
The problem cuts both ways. In Brunsdon's worked example, a sole parent receiving Jobseeker Support earns around $521 per week net — meaning 30% of income leaves just $365 a week to cover food, transport, utilities and health costs for two people.
"There can be a wide range of incomes for people in social housing, but the main challenge I see with applying the 30% rule in a rigid way to social housing tenants is that it doesn't leave much income for the rest of their costs," he said.
At the other end of the spectrum, a dual-income household on average wages could comfortably spend more than 30% of income on housing and still have ample left over. The same percentage translates to vastly different financial realities depending on where a household sits in the income distribution.
When 30% isn't survivable — the view from financial mentors
For those at the lower end of the income scale, the data tells a grimmer story. Fincap figures show the median rent-to-income ratio among clients of financial mentors reached 36.68% in 2024, up from 35.8% the year prior — well above the 30% threshold now being applied to social housing rents.
Fincap spokesperson Jake Lilley (pictured right) said any increase in housing costs forces a direct tradeoff elsewhere in the budget.
"Our annual Voices reports always show at least half of those supported by a financial mentor being in a weekly budget deficit," Lilley said. "The changes announced will also inevitably bring more demand for already stretched financial mentors. More households will seek help to try and rearrange expenditure around the change."
As rental costs continue rising and the prospect of higher mortgage rates looms, the gap between renting and owning is becoming harder to bridge for those at the lower end of the income spectrum.
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