As published in the 'Property Investor Magazine'
March 2016

Throughout the latter part of 2015 we heard a lot about the influence of ‘Auckland money’ in the regions and we did some work to quantify that influence, particularly in Tauranga and Hamilton.

The signs were strong with Tauranga seeing a marked increase in people moving from Auckland and Hamilton popular with Auckland investors looking for better rental yield.

But since then we’ve further developed the analysis and applied it across the whole country to find out how far flung that influence actually is.

So firstly a quick explanation of the method of analysis, then the stats.

Using LINZ title information we classify types of buyers, based on their overall portfolio ownership – are they first home buyers, multiple property owners or movers? And for multiple property owners we look at the location of the properties they already own – if most of them are Auckland based then we call them Auckland investors.

From there we can quantify what percent of purchases Auckland investors account for in any region, over any given period. In this case, let’s have a look since the Reserve Bank changes, targeting Auckland investors1, came in on 1 November 2015.

In Tauranga and Hamilton, Auckland investors accounted for 9% and 15% of sales respectively. This is further confirmation of Auckland investors’ preference for Hamilton – likely for better rental yield. And in Tauranga it shows that it’s not only attractive for movers looking for a lifestyle change, but also investors who are keeping their Auckland property.

Elsewhere Thames-Coromandel was very popular, with 23% of sales going to Auckland investors. This has always been a popular location for Aucklanders though – no doubt as a destination for holiday homes – especially during the holiday period when they spend more time there. 
The Kaipara District – particularly Mangawhai, and Mangawhai Heads is similarly popular but over the most recent holiday period actually saw less Auckland investor purchases (27% to 19%) than the year before.

The one area to really rise in popularity over the last year is Rotorua where Auckland investors were involved in 10% of sales, up from 4% the previous year. This is likely for the appealing rental yield compared to Auckland (roughly 6% compared to less than 4%).

So in the upper half of the North Island, there’s probably not too many surprises, but further south we’ve also heard the anecdotes of Auckland investors flooding the market. But the data just doesn’t back that up.

In Napier the Auckland interest is slightly down at 2% (from 3%) while in Wellington, where we’ve seen strong value growth over the last four months there has also been an increase in Auckland investors – however still to relatively low levels – 5%, up from 3% a year ago. So nothing like the levels further north.

And jumping to the South Island the influence of Auckland investors has been pretty flat, with only a slight increase in Dunedin and Queenstown-Lakes.

Ultimately then, it looks as if Auckland investors looking to diversify don’t like to fly too far from the coup. It seems familiarity with an area and proximity to Auckland sit pretty high on the importance scale.

Area

Nov 2014 – Jan 2015

Nov 2015 – Jan 2016

Hamilton

8%

15%

Tauranga

8%

9%

Thames-Coromandel

25%

23%

Kaipara

27%

19%

Whangarei

10%

9%

Rotorua

4%

10%

Taupo

5%

8%

Napier

3%

2%

Wellington

3%

5%

Christchurch

3%

3%

Dunedin

2%

3%

Queenstown-Lakes

5%

6%

1RBNZ changes:

  • Current LVR speed limits of 10% of new lending to customers with less than 20% deposit remains in place in Auckland
  • But raised to 15% outside Auckland
  • Auckland investor loans require a 30% deposit
  • Banks hold more capital against these investor loans