Exodus Families flee Auckland for cheaper homes
Auckland lost more than 40,000 people to other parts of New Zealand in just five years — and house prices had a lot to do with it. Ben Leahy meets an ex-Aucklander who’s never looked back.
Welcome to part two of our latest Home Truths series, taking an in-depth look at the housing affordability crisis. Across the week, we’ll examine causes and possible solutions, with input from would-be first home buyers and others. Part three will be published in the Herald tomorrow.
Graham Sumner decided he’d had enough four years ago. So he quit moaning about Auckland’s “ridiculously expensive” house prices and grabbed “life by the horns”.
He and his wife, Amanda, had been paying $450 a week to rent a “stinker” two-bedroom flat in Auckland’s Sandringham in 2016.
But when they became pregnant with their first daughter, they reevaluated.
Searching the country, they found a 170sq m, four-bedroom villa in Invercargill in New Zealand’s far south on a 500sq m section selling for less than $200,000.
The decision to pack up and head south was a no-brainer. “Heck, my mortgage payments are less than $250 per week,” Sumner said.
“What do you get in Auckland for that? Nothing. That is the cost of your petrol for a week.”
The Sumners aren’t the only ones waving goodbye to Auckland’s sky-high house prices.
What started as a trickle of Aucklanders leaving in 2013 has now grown into a movement approaching an exodus, research by consultant Ian Mitchell has found.
Between June 2013 and June 2018, Auckland lost an estimated 41,860 more people to other parts of New Zealand than it gained in new residents arriving from the regions, he said in a housing affordability report prepared for Auckland Council.
Those leaving are moving for a range of reasons, Mitchell said.
But the hunt by essential workers, young families and single parents for cheaper places to buy and rent is clearly a major reason, he said.
Despite the loss of Aucklanders, the city’s population is actually estimated to have grown between 2013 and 2018 due to overseas migration. About 118,000 more migrants and expatriate Kiwis arrived in Auckland from overseas than left for other countries.
Still — with so many Aucklanders leaving for other parts of New Zealand — statisticians have had to lower official population projections for the city.
My mortgage payments are less than $250 per week. What do you get in Auckland for that? Nothing. Graham Sumner Invercargill home owner
With Auckland losing about 10,000 people a year to the regions and overseas migration slowing, Stats NZ estimates the city’s population has grown by only about 2000 people between 2018 and 2020, Mitchell said.
And with Covid-19 closing international borders that growth may lessen further, he said.
The other point to note is that it’s not only young families leaving.
Aucklanders aged 60 to 69 years are among those leaving the most.
That suggests retirees benefiting from decades of rising house prices are selling up and using the value of their Auckland homes to fund quieter lifestyles near the beach, Mitchell said.
They may also be moving to be closer to family or to live in more affordable towns — or perhaps using the sale of Auckland homes to help raise deposits for their children to buy.
With those caveats mentioned, the data still made it clear young families were on the move, Mitchell said.
The most common group to leave the city is children under 9, while those aged 30-39 are the third most common group.
That matched with Stats NZ data showing Kiwi mums and dads are typically aged 31 and 32 at the birth of their children, and a study by analysts CoreLogic showing Auckland first-home buyers are typically 35.
Mitchell said “housing affordability has to be a key driver” behind why families are leaving Auckland.
Home ownership has now been declining across New Zealand for three decades, hitting younger Kiwis hardest.
Ownership among 30- to 34-yearolds has dropped from 72 per cent in 1991 to 51 per cent in 2018, and for 35- to 39-year-olds it has fallen from 79 per cent to 59 per cent.
These young families now face huge barriers to buying.
A typical Auckland home costs nine times a typical annual household income, according to CoreLogic and fellow analysts Infometrics.
Financial publication Interest.co. nz’s latest home affordability report says it takes a typical 25- to 29-yearold couple nine years to save a 20 per cent deposit on an $865,000 “affordable” Auckland home.
It’s almost impossible for single people on a median income to buy because they would need virtually all their income to make their homeloan repayments.
These pressures led Mitchell to estimate the number of working Aucklanders living in private rentals to have grown 35 per cent from 66,200 households in 2013 to 89,180 in 2018.
Mitchell said most of these work
ing families and households are unable to affordably pay the rent, let alone buy a cheaper-priced city home.
It raises questions about whether single-income New Zealanders, essential workers, and hospitality and retail staff can afford to live in the city, he said.
Yet with national house prices also skyrocketing, there aren’t many affordable regions left to move to.
Mitchell’s report shows Aucklanders are mostly heading to the neighbouring Waikato, Northland and Bay of Plenty regions.
But some are also heading to Canterbury, Hawke’s Bay and Otago.
According to CoreLogic, firsthome buyers are typically paying $770,000 in Wellington, $699,000 in Tauranga and less than $500,000 in Christchurch.
Christchurch is even cheaper for first-home buyers than some regional cities, such as Whanga¯rei and Napier.
It is also the only major centre where the typical first-home buyer’s loan repayment of $811 is cheaper than the city’s average $833 rent.
Despite the weight of numbers stacked against would-be buyers, it isn’t all doom and gloom, according to CoreLogic head of research Nick Goodall.
His team dubbed 2019 the year of the first-home buyer because they purchased a record high 25 per cent share of all properties sold and have since continued to buy throughout 2020 and 2021.
Goodall said there was also hope that ongoing apartment building in Auckland would lead to more cheap properties coming on to the market and providing alternative pathways to home ownership.
Sumner still counts his blessings he moved to Invercargill when he did.
“Even if it was six months later, we wouldn’t have been able to afford to do it,” he said.
His villa has now more than doubled in price since 2016 to be worth over $400,000.
That has allowed him and Amanda to take out a bigger home loan to pay for renovations.
“We’ve used this ridiculous spike in house prices to our advantage,” he said. “Our villa is 120 years old, but it is coming back to life.”
And the bigger home loan has barely stretched his budget.
Despite the mortgage repayments increasing from under $200 a week to now just under $250 a week, they are still manageable on Sumner’s single income.
“All I say to the younger generation is if they have an opportunity, go for it because they will get locked out if they wait.”