About a quarter of all renting households are paying 30% or more of their income in rent, Stats NZ data shows.
By Susan Edmunds of RNZ
The government is increasing the accommodation supplement for 111,000 low income renters by an average of $15.
But it is also hiking the amount 84,000 social housing tenants have to pay - from 25% of their income to 30% - leaving them about $30 worse off each week.
In the 2023 Census, 26.5% of renting households had rent costs of at least 30% of income, up from 26% in 2018 and 24.2% in 2013.
Of those, 18.3% had costs of 40% of income or more and 12.8% were spending 50% or more.
Those levels were constant from 2018 but up from 2013.
Infometrics principal economist Nick Brunsdon said 30% of income on housing costs was a good rule of thumb.
"But it is just that, a rule of thumb. It has grounding in where housing affordability sat historically, but that is less relevant today.
"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 line in the sand, not saying that people paying 29% of income on housing costs are a-okay."
He said there were two problems with using that measure for households at both the bottom and upper ends of the spectrum.
"For a low-income household - let's say a sole parent on Jobseeker Support in social housing ($521 per week net).
"For them, 30% of income works out to $156 per week to go on housing costs. Furthermore, 30% of income on housing implies 70% of income has to cover everything else - food, transport, health, utilities - which implies $365, which is going to be pretty tight for a parent and a child."
"Someone in this position in a private rental instead of social housing would also get Accommodation Supplement, up to $235 per week, but would also be facing much higher rent costs that are not pegged to their income."
"For mid to high income households - let's say a couple both working full time, at the national average of $81,900 in 2025, that's $2400 per week net - 30% works out to $734 per week for housing costs, which would be enough for renting a whole house most areas (more than average rent for every city and district)."
"That leaves $1712 per week for everything else, which is probably more than enough, so that couple could afford to spend more than 30% of their income on housing costs - say if they were paying off a mortgage."
"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."
Fincap said people financial mentors dealt with were paying a median 36.68% of income on rent in 2024, up from 35.8% in 2023.
Fincap spokesperson Jake Lilley said any increase would cause a tradeoff elsewhere and current benefit levels were extremely difficult to live on before any changes.
"Our annual Voices reports always show at least half of those supported by a financial mentor being in a weekly budget deficit.
"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.
"FinCap recommends a $30.5m per annum increase in sustainable funding for financial mentors with at least $5.5m more in funding from government. Such investment can ensure timely access to essential help so people can plan to get a bond arranged, get the power on and get food on the stove while keeping up the rent."
Simplicity economist Shamubeel Eaqub said lower-income people would have more of their remaining money taken up by essential costs such as housing and utilities.
Whether 30% was a reasonable level of spending depending on the amount of income being earned, he said.
"I guess the benchmark is whether these people are living a comfortable life now at 25%."
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