Wellbeing Budget 2023

Support for today
Building for tomorrow

Financial and physical capital

This aspect of wellbeing refers to tangible, human-made assets like buildings and machinery; knowledge-based property assets like research and development, arts and literature; and financial assets like currency, bank deposits, and loans and equity.

Research and Development (R&D) activity has grown significantly in recent years, with total R&D expenditure by business, government, and higher education reaching over five billion dollars in 2022 – an 11 percent increase compared with 2020, and a 67 percent increase compared with 2016. The number of businesses reporting R&D expenditure in 2022 was approximately 2,300, 45 percent more than 2016.

Figure 1 – Research and development (R&D) expenditure

Figure 1 - Research and development (R&D) expenditure

Source: Data from Stats NZ. All figures are nominal. All sectors

New Zealand’s housing remains among the least affordable in the OECD. New Zealanders spend greater shares of their incomes on housing on average than most other OECD countries, and the houses they live in are more likely to be crowded, unstable, and unhealthy. Despite house prices easing by 16.8 percent since their November 2021 peak, they remain above their pre-COVID-19 level in nominal terms.

Building consents data suggests demand for building housing has returned to around its pre-COVID-19 level, with new residential building consents falling 9 percent in February 2023 to 3,206 monthly consents (seasonally adjusted). This is likely due to falling house prices, rising interest rates, and cost pressures weighing on intentions. While disruption from the Auckland Anniversary Weekend flooding and Cyclone Gabrielle may have contributed to the fall, the slowdown in consents is consistent with expectations of softening domestic construction activity. Activity is likely to be supported by rebuild and recovery work from the recent severe weather events, although this is not expected to fully offset the slowdown in construction activity.

New Zealand households have developed a stronger financial buffer in recent years as the average household savings rate has increased. Households saved 3.9 percent of their net disposable income in September 2022, which is more than they did in 2017 to 2019.

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