10 Hidden and Exorbitant Costs of Living in New Zealand (and How to Reduce What you Pay)

Discover the biggest costs of living in New Zealand, from property rates and insurance to food, utilities and car costs. Our comprehensive guide breaks down the essential expenses every New Zealand household should know and tips to help you save.

Updated 26 August 2024

Summary:

From frustrating PayWave surcharges and steep property rates to soaring power, data and supermarket spends, the everyday cost of living in New Zealand can quickly become overwhelming.
Adding to the pressure, high-interest credit cards trap many Kiwis in debt cycles, costing thousands annually in interest payments alone.
While some of these expenses offer limited room for savings, rent and mortgage payments remain the largest financial burden for most households, particularly in major cities.
This guide highlights ten of the most significant everyday costs and provides practical tips and strategies for reducing spending - whether on daily essentials or big-ticket expenses like insurance and housing.

Hidden and Exorbitant Costs of Living:

29%+ p.a. credit cards

High-interest credit cards, like the GEM Visa and Q Mastercard, trap thousands of New Zealanders in long-term debt. Servicing an unpaid balance of $5,000 will cost around $1,500 a year, but many struggle to make more than the minimum repayment (around 3% to 5% of the balance).

Our research team has heard from many MoneyHub readers who don't know how to repay the balance or if they ever will - their repayments never seem to reduce the balance.

What you can do to reduce the cost: Our guide to repaying credit cards on an average salary has tips, and you can also consider a balance transfer credit card.

Our view: Building a savings plan for major purchases, like a car, rather than relying on loans, will avoid costly debt. If you've paid off a car loan, consider keeping the vehicle for longer until you need, not want, to upgrade - the savings will usually be significant. New Zealanders have too much debt - avoiding as much as you can by delaying buying big ticket items helps you long term.

Furthermore, one of the best ways to avoid falling into debt is by building a solid emergency fund. This fund can help you manage unexpected expenses without resorting to high-interest credit cards or personal loans. Financial experts generally recommend saving three to six months’ worth of living expenses in a separate account that you don’t touch unless absolutely necessary. The goal is to cover emergencies like car repairs, dental or medical bills, or sudden job loss without derailing your finances.

Rates Bills

Many households face significant annual rate bills, ranging from $2,000 in rural areas to over $10,000 in larger cities like Wellington, where rates were set to increase around 17% in 2024 per this Stuff.co,nz article and 6% in Auckland per RNZ. The costs keep increasing. Rates are often a surprise for first-time homeowners and can represent a significant portion of household expenses.

What you can do to reduce the cost: Rates can be a significant burden, particularly for those on lower incomes. What many people don’t know is that some councils offer rebates for eligible ratepayers. For instance, some regions provide rebates for households where income is within a certain threshold. Additionally, if you have significant equity in your home, you may be able to postpone paying rates until you sell the property or when it’s more financially feasible. In some cases, even tenants might benefit from these rebates if they qualify.

Suggested steps:

Check if you’re eligible for a rates rebate from your local council.
Investigate options for postponing rates if you have significant home equity.

Insurance Costs

Insurance expenses, including house, contents, car, health, and life insurance, can cost a typical family $15,000 annually. It gets expensive when you add house and contents, car(s), life insurance, pet insurance, and other key policies. Our guide to average insurance costs explains how the prices keep increasing. The cumulative cost is often underestimated until renewal notices arrive.

What you can do to reduce the cost: Our guides to comparing insurance costs Visit our guide to choosing the best insurance coverage (specifically Home, Car, Contents, Pet, Life and Income Protection) have ways to save.

Food and Supermarket Prices

Supermarket costs are notoriously high throughout New Zealand. Essentials like milk, cheese, and meat often cost more than in comparable countries. For families, grocery bills can climb as high as $300 to $500+ per week, with the average cost around $250 per week. This high cost is partly due to the market dominance of Woolworths (owned by Progressive Enterprises), New World, and Pak'N'Save (owned by Foodstuffs), which limits competition and drives up prices.

What you can do to reduce the cost: Have a read of our supermarket ripoffs guide to see if you're currently buying things that we see as overpriced. Fruit Shops in metro areas help with cheaper fruit and vegetable costs, as does bulk buying. Our guide to saving money on food offers actionable tips for saving on food.

PayWave Fees

Many businesses charge around 2% as a surcharge for using credit cards or contactless payment options like PayWave, with the issue raised by RNZ in May 2024. Although these fees may seem minor, they can add up significantly over time, especially for larger purchases. They're also very annoying.

What you can do to reduce the cost: If you're faced with a PayWave surcharge, chip and pin, avoid it. This Reddit post from early 2024 has more information about fighting against PayWave.

Healthcare and Dental Costs

Healthcare expenses can be steep, even with the public system in place. GP visits typically range from $50 to $120; if you need after-hours urgent doctor care, those prices can jump significantly.

Dental care and orthodontics can add thousands to your annual expenses. Many New Zealanders don't have the money for dental work, which causes other hardships, given the pain and discomfort.

What you can do to reduce the cost: With a shortage of GPs all over New Zealand, the demand means there are few ways to save. For dental, our guide to affordable dental care offers tips on how to minimise the cost and the insurance options available.

Vehicle Costs

Owning a vehicle involves ongoing expenses, including Warrant of Fitness (WOF) checks, vehicle registration (rego), road user charges for diesel and EV vehicles, and comprehensive insurance. These cumulative costs can become a heavy burden, particularly for those with multiple vehicles. And that's before considering petrol, which hovers between $2.50 and $3 per litre. If you have a car on finance, too often that's also a big ripoff - many New Zealanders pay 15% to 20% when they can get pre-approved finance for around 9%.

What you can do to reduce the cost: Regularly compare insurance providers and service costs. Our guide to reducing car ownership costs includes tips on cheaper rego, fuel-saving hacks, and choosing the right insurance cover. Using the Gaspy app is also helpful.

Public transport alternative: In many parts of New Zealand, public transport offers a more affordable alternative to owning a car. Even though commute times may be longer, the savings on fuel, parking, and car maintenance can be significant. For those commuting from outer suburbs, combining public transport with cycling (when the weather is favourable) can offer the best of both worlds - saving time and money while reducing the stress of driving in heavy traffic.

Power, Mobile and Broadband Fees

Daily connection fees for electricity, overpriced broadband, and expensive mobile data add up. A family of four without having anything special can be charged $600+ a month for power and broadband phone plans.

What you can do to reduce the cost: Switch to a plan that best suits your usage and consider bundling services (if it's cheaper) to get discounts. Our guide to comparing power, best broadband deals and mobile plans outlines the best deals for lowering costs without compromising limits or quality.

Our tip: Managing large bills can be stressful, especially when they don’t align with your pay cycles. One effective strategy is to break down these larger payments into smaller, more frequent ones that fit with your weekly or fortnightly pay schedule. Many companies, including some power providers, offer weekly or fortnightly payment options. If your provider doesn’t allow this, you can set up an automatic payment from your bank account into a separate bills account, ensuring you always have funds ready when payments are due. This method can also help build a small buffer over time, so you’re never caught short. Proven methods include:

Opting for payment plans that align with your pay schedule (weekly, fortnightly, or monthly).
Set up automatic payments to a separate bills account to manage expenses and build a buffer.
Consider budgeting apps that help you distribute your expenses evenly across pay periods.

Pet Expenses and Vet Bills

Owning a pet comes with ongoing costs beyond just food and toys. Routine vet visits, vaccinations, flea treatments, and emergency medical care add up. Chronic conditions requiring long-term medication or treatment can make pet ownership more expensive.

What you can do to reduce the cost: Consider pet insurance or a vet payment plan. Our guide to vet costs explains the expected prices, and our guides to the costs of owning a dog or cat explains the true financial obligations.

Rent and Housing Costs

Housing expenses consume most a typical household's budget. In cities like Auckland and Wellington, the weekly rent for a simple three-bedroom house can exceed $800. With housing shortages driving demand, rent increases have outpaced wage growth, leading many to struggle with affordability. Even if interest rates decrease further from their recent highs, mortgage or rent costs are still high.

What you can do to reduce the cost: The New Zealand economy is arguably reliant on high house prices - it's unfortunate that so many years of homeowner income is directed to chip away at inflated mortgage balances. The only way to save on housing costs is to keep your house price budget reasonable and affordable so that mortgage costs don't become unaffordable, and get the best mortgage (usually with the help of a mortgage broker).

Saving on renting is difficult, especially in high-demand areas, but there are strategies you can try. Consider moving further from the city centre, flatting with others to split costs (vs. taking a studio or one-bedroom apartment), or negotiating longer-term leases for potential discounts. However, the savings will be minimal—it's an unfortunate situation and a reason New Zealand has become difficult to live in and also move to, per this 2022 Guardian article.

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