Nonsense stats

The Herald reports:

It would take 19 median incomes in Auckland to buy a home for the city’s median house price.

Property in some of the world’s biggest cities cost a lot more than in our biggest city, but Auckland wages make it much harder to get on the property ladder.

In the 1,119,195 Census forms filled out for Auckland, the median annual income was $29,600, a Herald analysis found.

That’s almost 20 times less than the Real Estate Institute’s median house price figure of $582,000.

Auckland does have a problem, but this stat is meaningless. Individuals do not generally buy households, families do. The calculation that is generally used is to compare median household income, not median personal income.

Median personal income is always a pretty low figure as it includes a huge number of people not in paid employment – students, non working spouses and those retired.

So comparing individual income, instead of household income, to house prices is daft and meaningless.

UPDATE: Stats Chat also takes the story to task:

I checked with the Stats NZ Census figures (Excel spreadsheet) and found the $29,600 figure is for the usually resident population count aged 15 years and over. In other words, this includes everyone who is not in paid employment: all the students, retirees, parents who are staying at home, those on benefits and not working etc.

Using Statistics New Zealand’s income survey data for the June 2013 quarter (Excel spreadsheet), the median earnings for people in paid employment was $45,864. This figure is only from those earning wages and salaries and/or self-employment income.

The point I made.

They also adjust for household income to find the stat should be:

“It would take 7.9 median household incomes in Auckland to buy a home for the city’s median house price.”

7.9 is still too high of course, which is why we need more land for housing. But it is vastly different to 19 times.

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