Auckland home owners: Cashing up not trading up

Auckland home owners: Cashing up not trading up

The majority of Auckland home owners selling up and moving to Tauranga and Waikato are from the lower end of the market, but are still able to drive up local prices in those areas and pocket up to $244,000 on the move according to research commissioned by Westpac New Zealand.

So far this year, 24% of people moving house in Tauranga have been from Auckland, double the number in 2012 and up from the previous peak of 15% in 2007. Aucklanders are selling for an average price of $770,000 (below the Auckland median of $813,000), buying in top Tauranga suburbs at an average of $533,000 for an average cash benefit of $237,000.

SEE ALSO: Peter Thompson: Regulations, restrictions, and penalties won’t stop Auckland housing market

In the *Waikato District, excluding Hamilton, the influence of Aucklanders is even more pronounced. This year, 50% of the more than 300 properties purchased in the region so far this year have been to people moving from Auckland. In 2009 that was 23% and in 2013 it was 34%. Those moving from Auckland are selling for an average of $642,000 and are buying at an average of $398,000 pocketing an average of $244,000 in the process.

JamieFarmer

Jamie Farmer, Westpac Head of Consumer Bank Northern

This is the first collection and analysis of data on this emerging dynamic in the market. Jamie Farmer, Head of Consumer Bank Northern, said the CoreLogic data commissioned by Westpac showed an economic migration out of Auckland was underway and with no end in sight to rising Auckland houses prices raises questions about the future.

“The vast majority of Aucklanders moving to Tauranga and the Waikato District are selling below the median price ($813,000) suggesting they are selling up rather than trading up. That could be because they feel squeezed out of the Auckland market, for lifestyle reasons or the understandable appeal of life without a hefty mortgage. Either way, it seems a form of economic migration is underway with the cost of Auckland housing a key driver,” he said.

“Looking ahead, particularly for the Waikato District, questions around infrastructure and who is going to pay for it seem inevitable. Already there are housing projects in Pokeno and Tuakau that are getting the attention of Aucklanders. If the trend continues for another few years’ infrastructure like roads and transport connections will need to be looked at and is it an extension of Auckland or will the Waikato District be left to sort it out?”

Those moving to Waikato are overwhelmingly from South Auckland – Pukekohe, Manurewa, Papakura and Mangere East leading the way. This gives rise to the possibility that these are people who might work in South Auckland but are opting out of the Auckland housing market, getting better value for money housing wise and choosing to commute.

Whereas in the past Waikato properties being purchased by Aucklanders were lifestyle blocks that is rapidly turning around with 56% of all sales since the start of 2014 being houses. Aucklanders are also paying a premium and driving up local prices. The average price paid by Aucklanders in the Waikato so far this year is $398,000, an average of $22,000 more than locals. They are paying an average of 11.4% above CV compared to non-Aucklanders who are paying just 6.7% above CV.

In Tauranga, it’s a similar trend. People moving from Auckland are paying an average 15.2% above CV, 1% more than locals. In dollar terms that equates to an average price paid by an Aucklander of $533,000 compared to $475,000 by a local. Aucklanders account for 37% of all sales so far this year in popular Papamoa Beach and 10% in each of Mt Maunganui and Pyes Pa.

The data shows Northland is also gaining the interest of Aucklanders but suggestions they are looking as far afield as Hawkes Bay in the same numbers as Tauranga and Waikato are not borne out.

*Waikato District borders Hamilton from the north, east and west and Auckland council from the south. Key towns are Raglan, Huntly, Pokeno, Tuakau, Ngaruawahia, Te Kauwhata.

Aucklanders moving to Tauranga Infographic



SEE ALSO: Peter Thompson: Regulations, restrictions, and penalties won’t stop Auckland housing market

 

Fact Boxes (all data commissioned by Westpac from CoreLogic)

Aucklanders moving to Tauranga (so far 204 in 2015 vs. 113 in 2010):

  • Sell for an average of $770,000 (below median of $813,000)
  • Buy in Tauranga for average of $533,000
  • For average cash benefit of $237,000

Aucklanders buying in Tauranga:

  • Pay average 15.2% above CV
  • Pay on average $58,000 more than locals

Aucklanders moving to Waikato District (so far 159 in 2015 vs. 72 in 2010):

  • Sell for an average of $642,000
  • Buy in Waikato District for average of $398,000
  • For average cash benefit of $244,000

Aucklanders buying in Waikato District:

  • Pay average 11.4% above CV
  • Pay average $22,000 more than locals

 

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