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Moving Money

How widespread is the ‘Auckland Money’ influence? Corelogic senior research analyst Nick Goodall examines the data.

By: NZ PROPERTY INVESTOR

1 March 2016

Throughout the latter part of 2015 we heard a lot about the influence of ‘Auckland money’ in the regions. 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 country to find out how far flung that influence actually is.

Using LINZ title information we classify types of buyers, based on their overall portfolio ownership. 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 per cent 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, which came in on November 1, 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. Elsewhere Thames-Coromandel was very popular, with 23% of sales going to Auckland investors. This has always been a popular location for Aucklanders. The Kaipara district – particularly Mangawhai and Mangawhai Heads – is similarly popular but over the most recent holiday period actually saw fewer Auckland investor purchases (27% to 19%) than the previous year.

Appealing Yield

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 with Auckland (roughly 6% compared with less than 4%).

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 district.

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

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