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Exodus From Auckland

Aucklanders are fleeing the city as they hunt for cheaper houses, a lower cost of living, and a better lifestyle. Ben Tutty asks why people are leaving the big smoke.

8 October 2021

$1 million. That’s not this week’s Powerball jackpot, it’s the median house price in the Auckland region as of January 2021, according to the Real Estate Institute of New Zealand.

After years of increasing unaffordability, some Aucklanders have had enough.

They’re turning their backs on the big smoke and moving to smaller centres in search of a better, more affordable lifestyle.

What it costs to live

The easiest way to illustrate the difference in cost of living between Auckland and other centres in New Zealand is to look at median house prices:

Auckland: NZ$1,000,000

Tauranga: NZ$854,000

Wellington region: NZ$792,000

Hamilton: NZ$655,000

Palmerston North: NZ$650,000

Dunedin: NZ$618,000

Christchurch: NZ$520,000

If you bought at the median price in Christchurch, your yearly mortgage repayments could be around $18,200* less than if you did the same in Auckland.

That’s close to NZ$20,000 a year to spend on travel, investments, or 827 servings of avocado on toast at Auckland prices.

Auckland goes up faster

Vanessa Taylor, head of marketing at realestate.co.nz, explains another problem. She says Auckland’s house prices increase much faster than the rest of the country in nominal terms.

“When the Auckland market does increase in price, the percentage increase may be on par with other cities in New Zealand, but the actual dollar increase is usually much higher. That can make the market difficult, particularly for first-home buyers.”

For Andrew, a finance business partner at an engineering firm, that price difference was enough to spur his move.

Despite living in Auckland since he was six, he moved to Tauranga, paying NZ$670,000 for a four-bedroom new-build in September 2019. He says the Auckland property market is “ridiculously overpriced”.

“I recall looking at the same size new-build houses in Riverhead in Auckland, being built by the same builders – but for NZ$1 million to NZ$1.2 million.”

Realestate.co.nz data suggests that Andrew is just one of many Aucklanders looking at leaving the big city.

The number of searches by Aucklanders for properties in the Bay of Plenty on the site increased by 28 per cent in January alone, while searches in Canterbury increased by 37 per cent.

Less traffic, more living

Price dominates news headlines for the big city’s property market, but for many Aucklanders, it’s lifestyle that’s on their mind – and the lack of opportunity to enjoy life due to long commutes, the high cost of living, and long hours at work.

Iain Spanhake, a creative director who’d lived in Auckland for most of his life, moved to Hamilton three years ago for that very reason.

“I prefer the slightly more ‘chilled’ pace of Hamilton, the work/life balance and just how easy it is to live here,” Iain said.

The lifestyle on offer in the city is improving fast, giving people like Iain even more reason to stick around.

“We were especially surprised by the quality of the cafes, restaurants, and trendy eateries popping up all the time … and the art culture is really taking off.”

But what about job opportunities? Surely many Aucklanders have considered leaving for the regions, but have been blocked by their need to earn a crust or grow their career?

Not so, says Vanessa Taylor. “Covid-19 definitely accelerated the transition to remote work. Now people are having a look at their lifestyles to see if relocating will mean a better lifestyle. In fact, one of our executive team just bought his first home in Christchurch and is now working remotely.”

Investing outside Auckland

Another group of Aucklanders are buying investment properties outside Auckland due in part to the city’s high prices. I’m one of them.

Back in 2017, I personally started remote working as a freelance writer and bought a property in Dunedin – as both a home and as a future investment.

Ed McKnight, JUNO’s lead economist, says for investors and homebuyers like me who are priced out of Auckland, New Zealand’s smaller cities can be a great option. “We see a lot of investors in areas like Christchurch, purely because the average house here is around half the price.

“Plus, investing in smaller centres outside of Auckland is a great way to diversify risk in a portfolio – meaning if prices dip in Auckland, you’re less likely to see a drop in returns across your portfolio.”

Auckland property values stood still for three years until 2020, when they rocketed up by almost 20 per cent. As a result, we’re soon likely to see far more Aucklanders investing in the regions, he says.

“Because Auckland house prices are already so high, an increase of 20 per cent means huge equity gains.

“People can use that equity to buy investments in other, more affordable regions like Christchurch for example.”

What’s in the future for Auckland?

Auckland’s population and house price growth has been absolutely bonkers for almost 10 years and particularly over the past 12 months. But will it continue?

The city’s population reached 1.7 million at the end of 2020, according to estimates from Statistics New Zealand.

As high as this might seem, this is at the very lowest end of their forecasts for the super city’s population growth.

Covid-19 obviously played a huge role, but those numbers beg the question – is part of the reason for the city’s slowing growth because Aucklanders are leaving for greener (and cheaper) pastures?

Cheaper homes, remote working opportunities, less traffic, a better lifestyle, and more time to spend with family. It’s hard to argue with that.

*Assuming a 2.5% interest rate and a 30-year loan term.

Informed Investor’s content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.

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