Data from the Ministry of Social Development shows that incomes have increased fairly evenly across New Zealand’s families but housing costs are disproportionately hitting the poorest.

The report has led to widespread criticism of the government’s record on tackling housing affordability and income equality.

The New Zealand Initiative think tank highlights that real incomes have increased over the past 20 years or so by roughly the same percentage for those in the twentieth percentile to those in the middle.

However, housing costs are pressuring families, particularly those at the lower end of the income scale. Income inequality is worse after including housing costs.

“The data clearly shows that New Zealand families are sharing broadly in increased real income. Where we have a real problem, though is in housing costs,” says Dr Eric Crampton, Chief Economist at The New Zealand Initiative.

He says that income inequality has been flat for decades but the sharp rise in housing costs is exacerbating the issue.

Meanwhile, the Child Poverty Action Group says that higher median incomes only tells one part of the story.

"There is nothing to suggest that a greater median or mean income figure is evidence of our most vulnerable families being any better off," says Associate Professor Mike O’Brien, CPAG social security spokesperson.

"Housing affordability has proven to be the most severe issue affecting our low-income families, as well as the health impacts of low quality and overcrowding for children," adds O’Brien.

CPAG is calling for increased supply of affordable housing to help reduce child poverty.

The Leader of the Opposition Andrew Little says that the report is further evidence that National is failing thousands of New Zealanders.

“After taking housing costs and inflation into account, the report also finds that the average household saw a small fall in its income last year. For superannuitants, the fall was equivalent to $2,113 a year,” says Little.

The co-leader of The Greens also took aim at the government saying that current policies are hurting the poorest and increasing poverty.

“Housing costs are eating into families’ budgets at a rate we’ve never seen before,” Green Party Co-leader Metiria Turei said.