There’s no doubt Aucklanders have been significant players in regional property markets in the past and, understandable, given that the average house in Auckland could be sold and traded for multiple properties elsewhere. However, using Tauranga and Queenstown as examples, the share of owner-occupier purchases in these areas that have recently gone to relocating Aucklanders is low. And in Hamilton, for example, the share of purchases going to investors from Auckland is also low.
CoreLogic Senior Property Economist Kelvin Davidson writes:
The CoreLogic Buyer Classification series shows that in the second quarter of the year ‘movers’ (i.e. existing owner-occupiers who are relocating) accounted for 27% of all property purchases across NZ. As the first chart shows, this was the lowest figure in about eight years and a couple of percentage points below the long-term average of 29%.
Clearly, movers haven’t completely shut up shop, but they are less active (in terms of market share) than is normally the case. This is likely to reflect the large amount of money required to trade up (not only to pay for potentially a larger/newer house, but also legal fees etc), already-high debt levels, and tight lending criteria at the banks. Indeed, some are clearly choosing to renovate rather than relocate, with Statistics NZ reporting high levels of consents at present for alterations & additions.
The reluctance of existing owner-occupiers to relocate is even more pronounced in Auckland, where movers’ market share of property purchases was only 22% in Q2, the lowest for more than 10 years. Is movers’ relative lack of action within Auckland explained by more of them selling up and actually shifting to other parts of the country?
Take Tauranga and Queenstown as examples. These are commonly believed to be hotspots for inbound Auckland movers, and in fact, they have been in the past. In Tauranga, Aucklanders’ share of mover transactions peaked at 31% in late 2016 (see the second chart), and peaked at 26% in Queenstown at a similar time (see the third chart). Since then, however, the importance of Aucklanders to overall mover activity in both these areas has faded away and in Q2 2019 was 11% in Tauranga and just 5% in Queenstown. The flipside is that locals have now returned to more than a 50% share of mover purchases in both areas.
Now it’s important to reiterate that the focus of the above discussion is on movers. However, we can also look at the choices being made by Auckland investors (termed ‘multiple property owners’ in our data, or MPOs) and generally speaking, the same message applies here too – that they have been significant players outside Auckland in the past, but their market shares have faded lately. In Hamilton, for example, Auckland MPOs made 17% of purchases a few years ago, but this figure has now fallen back down to 7% (see the fourth chart). In Dunedin, currently one of NZ’s ‘hot’ markets with strongly rising property values, Auckland investors are only accounting for about 2% of purchases.
So in a nutshell, it’s not entirely a myth that Aucklanders can and do play significant roles in other areas’ property markets. However, their importance has certainly diminished in the past few years, with the weak market in Auckland itself no doubt denting confidence and prompting many to re-focus on their own ‘back yard’.