Many households applying for financial help from Fifeshire Foundation are paying more than 40 per cent of their income on accommodation.
When the foundation analysed figures from its monthly grant applicants last year, it found the average weekly income was $826, while the weekly cost of housing was $350.
That meant the average proportion of weekly income spent on housing was 43 per cent, while the median was higher at 48.7 per cent. One applicant was spending $551 a week on housing from a weekly household income of just $636.
Chair Peter Verstappen says Canstar, the New Zealand consumer ratings agency, and Salvation Army say households should spend no more than 30 per cent of their gross income on housing, leaving enough to cover other essentials.
Yet many of the households making monthly grant applications to Fifeshire Foundation are paying significantly more than that.
“Most of the people who apply to us are on benefits, so on very low incomes in the first place, and have almost no discretionary income. When your household income is around $800 a week and you’re spending $300 to $400 of that to cover your housing costs, there’s nothing.
“You’re running on the smell of an oily rag from day to day and week to week.”
Increasingly, the foundation is receiving grant applications from households with higher incomes that find themselves in a situation of crisis or hardship.
“We see budgets now that at first glance, you think this family has high income with $1,200 to $1,500 coming into the household.
“When you look at their expenses, the cost of living for families has gone up significantly so that even a relatively high income now does not guarantee you will make ends meet.
“When you have high housing costs, high fuel costs, and other things, you can tip into moments of crisis and hardship. That’s a trend we’re seeing.”
If households could pay less for housing, they would have more money left over to cover their other needs, he says.
“When rent is gobbling up 40 to 50 per cent of your weekly income, which is a low income anyway, you have very little to come and go on. If we have to identify a single thing that keeps people in a poverty trap, housing has to be right up there.”
Peter says the high cost of renting has its roots in changes to the housing system over the past 40 years, as governments moved away from the old state housing model.
Much of the housing market has since shifted into private ownership, he says, leaving many people on very low incomes paying high rents, with the Government topping up their income through the accommodation supplement.
He acknowledges both the Government and other agencies have been working to address the problem, with more social housing developments in the region.
But he would like to see more discussion about housing in the lead-up to the election.
