People often say that everything is going up in price. This is not true. Some things have fallen in price and we can see this if we look at the Consumers Price Index produced by Statistics New Zealand (SNZ).
SNZ gathers prices on about 700 standardised items every three months (more frequently for some like food and petrol), consumed by the average NZ household.
We can compare prices of things over the past year with prices for the same things 20 years ago and see that one group of items has fallen in price by 97%!
The following list shows the 43 main categories of items priced by SNZ and how much they have changed in price since the turn of the century, with the average price change coming in at 53%.
Prices have soared for cigarettes, local authority rates, education, owning a home, electricity, hospital services, and insurance. They have fallen for appliances, vehicles, footwear, and technology.
If you rent, like booze, clothes, furniture and tech., your cost of living has increased far, far less than someone who smokes, owns their own house, reads books, and gets educated. Enjoy!
Source: Tony Alexander, independent economist.
While the cost of home ownership has increased 136% and the cost of property maintenance has gone up 90% (both a lot more than the change in the CPI) the actual cost of residential renting has gone up only 39% – a lot less that the CPI.
So those who claim that rents are rising far too fast and that rent increases should be restricted are obviously barking up the wrong tree.
Do you agree that tenants are actually getting remarkably good value?
IMPORTANT: This article is of general nature only and readers should obtain advice specific to their circumstances from professional advisers.
P.S. I research and interview economists, NZ investors and profitable companies to find tools & tactics that you can use to achieve financial freedom.