Aucklanders' exodus to the country gathers pace

by Greg Dixon / 03 July, 2017
RelatedArticlesModule - Moving to the country

Photo/Alamy

Gridlock, house prices and the cost of living have pushed increasing numbers of Aucklanders to leave the rat race for the joys of living in the provinces.

If you believe the overheated headlines, you’d reckon you were about to be knocked over in the rush for the exit.

“The great Auckland Exodus,” bellowed one in March. “Auckland exodus expected to put extra pressure on regions,” boomed another in January. Would the last one out please turn off the lights then. Well, perhaps not.

In reality, nobody is quite sure whether there has been a torrent, a trickle or a modest gush of Aucklanders relocating to other parts of the country. Statistics New Zealand doesn’t know. Its most recent figures show that a little over 52,000 migrated internally from Auckland to elsewhere between 2008 and 2013, the last two census years. To find out what’s happened since, we’ll have to wait for next year’s official head count.

In the meantime, a best guesstimate of the so-called exodus suggests the actual number of Aucklanders who last year did what my partner, Michele Hewitson, and I have just done – leave for a new life in “the provinces” – might in reality barely fill Eden Park’s western stand. An estimated 10,000 internal migrants left Auckland for the regions in 2016, according to the Salvation Army’s most recent “State of the Nation” report. Its author, Alan Johnson, calculates that 40,200 moved from Auckland between 2011 and 2016. To put that in context, net international migration to the city was 41,000 last year alone.

Yet – and my apologies to Buffalo Springfield – there’s something happening here, even if what it is ain’t exactly clear.

Johnson’s figures do suggest the numbers leaving Auckland are increasing – 40% of his 40,200 left during the past two years, 2015 and 2016, a quarter in the past year alone. Johnson believes this steadily growing outflow will only increase.

There are signs even the modest numbers who have left have affected the regions. On a macro level, migration from Auckland seems certain to be partly responsible – along with Auckland property speculators looking for cheap rental properties – for driving up property prices outside the super-city, particularly in the regions just to its south. As far back as 2015, a report done for Westpac found that 50% of properties sold in the Waikato district, excluding Hamilton, in the first half of that year were bought by people moving from Auckland (up from 23% in 2009 and 34% in 2013), while a quarter of the properties sold in Tauranga went to relocating Aucklanders, double the number from just three years before.

The Westpac report is actually a fascinating snapshot of the micro, albeit one taken in a year when Auckland’s insane property prices leapt on average by a whopping 22.5%.

The report says that on average, those moving to Tauranga were selling in Auckland for $770,00 (below the then median price of $813,000) and buying in Tauranga’s suburbs for $533,000, meaning these escapees pocketed a nice bonus of $237,000.

It was even more of a windfall for those moving to Waikato, excluding Hamilton. On average, they sold for $642,000 in Auckland and bought for $398,000, giving them a profit of $244,000.

“State of the Nation” author Alan Johnson.

So there’s decent money to be made in moving. And of course, it makes real sense to make the most of your Auckland home’s equity. Certainly, as Michele and I have done, selling high in Auckland and buying lower elsewhere means you can bank the difference, get more for your money and maybe become mortgage-free.

The windfall for sellers in the regions is that we Aucklanders are pushing up their property prices, too. The 2015 Westpac report found that Aucklanders were paying more than locals for houses in Tauranga, an average of $58,000 more.

That Auckland effect is being felt well beyond Tauranga and Waikato. In the area we’ve just moved to – Wairarapa near Masterton – about 20% of the lifestyle blocks sold last year by one local agent, Property Brokers’ Carolyn Collier, went to Aucklanders “wanting to escape from the rat race and the traffic”. Wairarapa-wide, property prices surged during 2016.

The waters have muddied a little in the first part of this year, however. Collier says she’s seen much less interest from Aucklanders in the past month or two, which might have something to do with the city’s property market going off the boil; Quotable Value said this month that growth in property prices had eased back nationwide, with Auckland seeing only slight growth in the past three months.

Still, the big uptick in real estate values in most regions last year, particularly those close to Auckland, suggests there’s already significant migration – as well as investment – from the city, says Johnson.

It also implies a significant shift in history. “What you’ve seen over the past 10 years is a reversal of a hundred years of internal migration history,” he says. “Previously, everyone was moving from the provinces to Auckland, and now the reverse is happening. It started with a trickle 10 years ago and I think it is a steady stream.”

Property Brokers’ Carolyn Collier.

Blurred boundaries

But when it comes to defining as migrants those leaving Auckland for Tauranga or Waikato, we may just be thinking about it wrongly. Economist Shamubeel Eaqub believes these three regions’ political boundaries are now completely irrelevant.

“I would go further and say that [Waikato and Tauranga] are actually Auckland; in real economic terms, I don’t think there is any difference between Auckland and Tauranga and Waikato. I think the political boundaries we have now that define Auckland are completely arbitrary relative to what’s happening economically.”

Johnson agrees. Although he thinks more and more Aucklanders will sell and leave, they may not necessarily be unplugging themselves from the Auckland economy.

“I think some of that spillover is people living in the northern Waikato and still being connected to Auckland but living over a nominal boundary line that is the top of the Bombay Hills. For example, someone is living in Pokeno but is commuting to Auckland for work. There are blurred boundaries.”

The findings of that 2015 Westpac report bolster this thought. It found that most Aucklanders selling up for Tauranga or Waikato were “from the lower end of the market” and overwhelmingly from southern Auckland, including Pukekohe, Manurewa, Papakura and Mangere East.

Westpac’s then head of consumer bank northern, Jamie Farmer, concluded that these Aucklanders were “selling up rather than trading up” by moving to Tauranga and Waikato. “That could be because they feel squeezed out of the Auckland market, for lifestyle reasons or for the understandable appeal of life without a hefty mortgage. Whichever way, it seems a form of economic migration is under way, with the cost of Auckland housing a key driver.”

In other words, people are opting out of the Auckland property market, buying cheaper and better in Waikato and then commuting to Auckland for work.

Unlike the northern Waikato, Tauranga is, of course, no commuter belt for Aucklanders. Still, the city’s mayor, Greg Brownless, says it’s hard to escape the conclusion that Aucklanders are playing a big part in driving population growth in his patch. This year, Tauranga pushed out Dunedin to become the country’s fifth-biggest city. In the past 10 years, its population increased by 20,000; it is projected to increase by about 30,000 in the next decade or so.

Tauranga has seen growth spurts driven from Auckland before. According to Brownless, as long as 15 years ago, one Tauranga councillor would regularly tell his fellow politicians, jokingly, “We should put a fence up at the top of the Kaimais.”

But this Auckland influx has exacerbated the shortage of property and continues to drive up prices in Tauranga. “People think, ‘Oh, more people, more ratepayers’,” says Brownless, “but the actual cost of getting infrastructure in the ground to service all that is huge.”

You can run but you can’t hide from Auckland’s problems, apparently.

Economist Shamubeel Eaqub. Photo/Ken Downie

The weight of even a modest exodus

But if the so-called exodus of Aucklanders to the regions is happening – or does happen – it isn’t just putting pressure on property prices and infrastructure.

Johnson says the rental markets in towns outside Auckland – particularly in Eaqub’s new Greater Auckland Economic Zone, which includes Waikato and the Bay of Plenty – will feel the weight of even a modest Auckland exodus, particularly as ageing Auckland baby boomers who don’t own property end their working lives and look for cheaper places to live.

“There are something like 95,000 Auckland baby boomers who don’t own a house and you think, ‘Well, what happens if they all decide to leave Auckland?” says Johnson. “The total number of rental properties in Waikato, Bay of Plenty and Northland is 105,000. So it doesn’t take a lot of change in Auckland to have a huge impact on those surrounding regions.”

Of course, for some regions, relocating Aucklanders are to be wooed. Enterprise Dunedin last year paid for a flash supplement in the New Zealand Herald pitched at attracting Aucklanders to not only visit the city but also move there. “We were quite surprised at the level of interest,” the agency’s director, John Christie, says. “Relocation really seems to have tapped a vein. We’re pleased with the response, and we’ll be looking at following it up with further work.”

What is motivating people to leave Auckland for Waikato or even Dunedin will probably seem obvious: the Big Smoke’s appalling traffic, sky-high rents and house prices and eye-watering cost of living.

But there are other reasons: “It makes a lot of economic sense to unlock your [Auckland home’s] equity,” Eaqub says. “But for some people, it might be the prospect of actually being able to buy a house. So when I look at people in their mid-thirties and mid-forties, they wouldn’t have built up much equity, even with the current housing market, because a lot of them would have been renting. So for a lot of them, [moving out of Auckland] is actually an opportunity to get into the housing market and get that stability people are looking for.”

Enterprise Dunedin’s John Christie.

It often comes down to jobs

Given the number of wannabe first-home buyers struggling to own a place in Auckland, you’d expect them to be rushing to exit Auckland. So why are we not seeing this expected exodus? Well, whatever else you might say about Auckland, its complex economy offers a plethora of jobs. Not so in the regions outside the main centres. Employment opportunities remain the handbrake on more Aucklanders – both cashed-up mid-lifers and wannabe homeowners – heading to the regions, says Eaqub.

“I think that is the main reason we haven’t seen what you might call an exodus, why we haven’t seen many more people leaving. The reality is that to find a job that is comparable in terms of income and skills for you and your partner in a place that is outside Auckland – and is much smaller – can be very, very difficult.

Waikato. Photo/Getty Images

“That’s what we’ve been finding, for example, for some of the firms that I advise in the provinces. They might be looking for a CEO, and when you’re looking for a CEO, you might quite often be able to find a very good candidate, but that person will only want to move if their partner can also find a good job. It’s about jobs … but it’s also about jobs for everybody.”

Still, such worries don’t seem to have slowed the Auckland hordes pouring over the Kaimais to Tauranga, that shining city on the bay.

“We haven’t had to build a wall yet,” Mayor Brownless deadpans. “But if we do, Auckland is going to pay.”

Going places…

Numbers of Aucklanders who moved to new regions between 2008 and 2013:

  • Waikato: 15,678
  • Northland: 8736
  • Bay of Plenty: 7770
  • Wellington: 7362
  • Canterbury: 6264
  • Otago: 4566
  • Manawatu-Whanganui: 3369
  • Hawke’s Bay: 2460
  • Taranaki: 1791
  • Gisborne: 780
  • Nelson: 729
  • Southland: 639
  • Marlborough: 618
  • Tasman: 519
  • West Coast: 282

Gone bush…

  • Politician and ex-TV presenter Tamati Coffey: Auckland to Rotorua
  • Musician Hollie Smith: Auckland to Tauranga
  • Writer Lloyd Jones: Wellington to Martinborough area
  • Broadcaster Marcus Lush: Auckland to Bluff
  • Journalist Deborah Coddington: Wellington to Martinborough
  • Philanthropist Sir Eion Edgar: Dunedin to Queenstown
  • Novelist and writer Paul Thomas: Wellington to Martinborough
  • Advertising guru Peter Biggs: Wellington to Featherston
  • Musician Shayne Carter: Auckland to Dunedin
  • Musician Scott Towers: Auckland to Napier
  • Journalist Lynda Hallinan: Auckland to Hunua

This article was first published in the June 17, 2017 issue of the New Zealand Listener.


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