Andrew Laxon talks with Mike and Gemma about the possibility of even moving out of Auckland. Our panel of experts give advice to them.
Aucklanders are pushing up prices as they move to the regions.
Up to one in four property sales in parts of provincial New Zealand are now to Aucklanders, with many buyers forced from the city as prices spiral beyond their means.
The exodus of frustrated first-home hunters along with cashed-up baby boomers and investors seeking better financial returns is being attributed to unprecedented house price inflation in our biggest city. But it's having a domino effect in regions.
Prices outside the city of sails are surging to new highs as demand for more affordable real estate beyond Auckland's territorial boundaries spikes. It has seen provincial residents scrambling to purchase amid the rush for properties, or being priced out of their once affordable home towns because of the influx of outside buyers.
Figures released exclusively to the Herald by data analysis company Core Logic show around one in five residential property sales in Tauranga during the first quarter of this year were to Aucklanders, though Bayleys says up to half its Tauranga sales are now to Auckland buyers.
QV reports that up to 60 per cent of people turning up to the city's auctions rooms last year were from north of the Bombay Hills, and one in three realestate.co.nz searches for Bay of Plenty property are from Aucklanders.
The influx had seen locals forced out of Tauranga to the likes of Te Puke, Matamata and Rotorua to secure a home.
The situation is echoed in Hamilton, where 17 per cent of property sales are now to Auckland buyers and 34 per cent of online searches for Waikato property are from the Auckland region.
The figure was even higher in Whangarei, where 24 per cent of property purchases are being financed by Auckland money.
Auckland-based Loan Market mortgage broker Bruce Patten says 90 per cent of his clients who buy outside the city are now purchasing in Tauranga. The influx had riled many local residents, Mr Patten said.
"They don't like it. The ones that own - it's increasing the value of their house. But the ones that don't own feel quite aggrieved there's so many Aucklanders buying in their neck of the woods and pushing prices up."
The latest data from QV shows Auckland house prices have plateaued on the back of measures to slow investor activity, though prices are beginning to head north again. However, soaring demand - much of it from Auckland housing refugees and investors - has seen property values surge in neighbouring regions.
The median price for a Tauranga home is now $511,500 - up 18.4 per cent ($79,500) in the year to March.
Hamilton has also seen huge interest from Auckland buyers. Its median value is now $472,000 - up 34.9 per cent ($122,000) in the past 12 months.
There are also reports of surging activity in Wellington and even Dunedin as the "halo effect" of Auckland's housing market fans out across the country, with reports of buyers forgoing due diligence checks to secure a home.
QV spokeswoman Andrea Rush said despite prices slowing in recent months, Auckland property values still jumped 25 per cent during 2015. The average Auckland home was now worth more than $930,000 - nearly twice the standard value for the rest of the country.
This had rendered many so-called "affordable" suburbs out of reach for entry-level buyers.
"They are fast disappearing."
While first-home buyers could still secure an entry-level Auckland property three years ago in the $400,000s, the market had moved. The new 'entry level' was now in the $600,000s, she said.
It's the only way to get on the ladder. There is certainly a lifestyle aspect to it, but the main reason is to own their own home.
"There are now very few places in Auckland you can buy a stand-alone home or even a unit or townhouse for under $600,000.
"When something goes from $400 [thousand] to $600 [thousand] and it's in Otara, it prices a lot of people out of the market."
Low deposit mortgage restrictions had compounded the problem. Reserve Bank rules require most buyers to raise at least 20 per cent deposit.
It meant a young couple looking to purchase a basic stepping stone Auckland house needed to save around $120,000 to secure a mortgage, not to mention servicing costs on a $480,000-plus loan, she said.
"That's a lot of money. Anyone without that has really been pushed out of the market."
She also hit out at the Government's KiwiSaver first home grant scheme, saying thresholds needed urgent revision.
To qualify for the taxpayer subsidy, Auckland buyers have to purchase below a $550,000 cap. But there were "slim pickings" in that price bracket, even in traditional West and South Auckland suburbs popular with first-home buyers and investors such as Glen Eden, Henderson, Kelston, Otara or Manurewa.
"There are very few suburbs left where you might find something around that level.
"If you want something with three bedrooms and some grass, you're going to be very lucky to find something in the 5s and probably into the 6s, and it's going to be a do-up."
Though apartments were an option, many had leaky building problems and came with added costs and complications like body corporate fees and leasehold titles, she said.
The affordability crisis had forced many buyers out of the city.
"People are weighing up, 'What does my lifestyle look like if I can get a similar paying job in a regional centre where I can buy a nice home at a price I can afford and manage the mortgage repayments?'"
Mr Patten agreed rampant house price inflation had driven many buyers out of Auckland to Whangarei, Hamilton, Tauranga and Hawkes Bay.
"It's the only way to get on the ladder. There is certainly a lifestyle aspect to it, but the main reason is to own their own home."
Anecdotal reports suggested 60 per cent of some land and home packages in the regions were being snapped up by Auckland buyers, who could scrape in with just 10 per cent deposit on a new build.
And in terms of bang for their buck, it was a no-brainer as to what someone's hard-earned money would buy in provincial New Zealand compared to Auckland.
"In Auckland, for $700,000 you're probably getting a unit now. In Tauranga you're getting a four-bedroom, two-bathroom [house] on a 500sq m-plus section.
"So it's a significantly better proposition if you're looking at what they are like-for-like."
Auckland's median house price of $731,000 would still be considered an expensive property in Tauranga, while for $1 million, "you're one street off the Mount".
But it would be difficult for anyone moving to the provinces to buy back into the Auckland market, he warned. And as prices accelerated in the regions on the back of growing demand, Auckland money was starting to buy less elsewhere.
"We've had people at $450 [thousand] this time last year in Tauranga and they're now paying almost $600 [thousand] for the same property. It's the land value that's gone up mostly. That's a 20-25 per cent increase."
Eves and Bayleys Realty Group marketing manager Karen Worsley said up to half the firm's sales were now to Auckland buyers.
Many were purchasing in Tauranga as an investment, remaining in Auckland as renters, but planning to shift in the next 10 years.
A typical first home with three bedrooms and land would set buyers back anywhere between $400,000 and $550,000, depending on location.
Former Aucklanders James Rea (left) and Ivana Rea, with daughter Alexis Rea, 2, in their new house in Papamoa. Photo / Alan Gibson
For six months James Rea and his wife Avana hunted for an Auckland house but were repeatedly outbid.
"We were looking at houses [expecting them to fetch] $550,000 to $600,000, then you see it sold for $800,000 and you were never in the ball park."
Armed with a $100,000 deposit, they initially looked for a three-bedroom house in Avondale before spreading their search to New Lynn.
Eventually they realised their $600,000 budget was no match for the cashed-up investors they were competing with who were "looking to line their own pockets".
"You start looking further out and you're looking at places you're going to have to spend $100,000 on just to make it liveable. There are so many compromises.
"You'll have a larger commute. The local schools are not as desirable as you might want. The area itself isn't desirable.
"We looked at our situation and said: 'Why are we in Auckland?'"
Exterior of the property in Papamoa owned by former Aucklander James Rea who relocated to the Bay of Plenty recently. Photo / Alan Gibson
So Mr Rea, a 37-year-old insurance broker who moved to Auckland from the UK six years ago, asked his company whether he could transfer to a regional branch.
A position was available in Tauranga, so the couple, who have a 2-year-old daughter, Alexis, started looking for a house in the Bay.
After a month, they put a successful offer on a three-bedroom, two-garage, 4-year-old, double-glazed home in Papamoa on a 450sq m section. They paid $520,000 and moved south to start their new life in December.
"We probably paid too much for our house ... thinking Auckland prices. But it doesn't matter in the long term. We're in. We've bought something and we don't have to worry. It's peace of mind, I guess."
Mr Rea said they were loving their new lifestyle and had no regrets, though he wouldn't rule out returning to Auckland eventually."Who knows. Not for now."
