Benje Patterson gets up close and personal with the regional population diaspora

Today's guest Top 10 is by Benje Patterson, a senior economist at Infometrics.

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With Auckland house prices having risen to absurdly puffed up levels over recent years, the dream of owning your own home in our biggest city has gotten out of reach for many first homebuyers.  This situation has led to many homebuyers casting their net wider and considering settling in the regions.  Not only has job creation in many regional economies been good of late, but technological improvements and increasingly progressive employers have made remote working arrangements a viable option for some.  This Top 10 considers regional population diaspora in more detail.

1. House sales data shows Aucklanders are moving to the regions

Understanding regional migration in New Zealand is best measured at census time when everyone gets a chance to say where they previously lived.  However, some partial measures of regional migration can be gleaned from the housing transactions of existing property owners. The smart people down at CoreLogic have been running through property transactions data and have shown big increases to the number of Aucklanders cashing up and moving to the regions.  Nick Goodall says:

“More and more Aucklanders these days are selling out of the Super City and shifting to the regions”

“In 2015 we saw more than 3600 households trade the big city life for the more relaxed lifestyle elsewhere. This was a 60 per cent increase on the year before.”

“Consistently number one is Tauranga, often favoured by retirees, with Whangarei, Thames Coromandel, Hamilton, the Far North and the Waikato District all featuring heavily in the top destinations for Auckland escapees.”

2. Policy changes have further encouraged international immigration into the regions

It hasn’t only been Aucklanders moving to the regions, but there has also been a significant increase in international migration to the regions.  Some of the international migration boost has been due to relatively favourable job prospects in New Zealand’s regions compared to prospects in many overseas economies, however policy changes have also contributed.  A policy announced last year gives immigrants more points for regional jobs and business investment than for those considering settling in Auckland.

“Prime Minister John Key announced last July the government would triple bonus points for immigrants with a job offer in the regions, on the condition they stay there for at least a year.

A similar incentive doubled the points of business people setting up a company outside Auckland who applied for an entrepreneur work visa.

Official figures show that, in the first five months of the new scheme, 144 more skilled migrant visa applications were approved for those settling outside Auckland than those in the city (at 2223 compared to 2079).

In the corresponding period a year earlier, 282 more were approved for Auckland than for the regions (1812 compared to 1530).”

3. Population growth strongest in regions around Auckland and in Queenstown

Not surprisingly, the increasing numbers of Aucklanders looking at regional options, coupled with elevated international net migration, have pushed up population growth in New Zealand’s regions.  All regions, apart from West Coast, experienced population growth over the June 2016 year.  Growth at a regional level was generally fastest in regions surrounding Auckland, but there were also parts of Canterbury and Otago with exceptionally rapid population growth. For example, Queenstown-Lakes District saw a 7.1% increase to its population over the past year.

“The four fastest-growing regional council areas accounted for over 75 percent of New Zealand’s population growth in the year to June 2016, Statistics New Zealand said today.

Auckland’s population swelled with a 2.8 percent increase, followed by Canterbury and Waikato (2.3 percent each), and Bay of Plenty (2.2 percent). These regions all exceeded the national level of 2.1 percent growth.”

4. Silver economy’ – a silver bullet for regions

Professor Paul Spoonley, a sociologist at Massey University, has long argued that aging demographics will produce skills shortages in New Zealand and its regions. Regional and international migration are key elements to helping plug gaps. But let’s note that not all baby boomers are ready to retire just yet, and when they do they will still be a big source of demand.

“…the answers lie in facing demographic changes with optimism.

A massive surge in the size of the ageing population across New Zealand – from 600,000 in 2013 to over one million a decade on – is “not a problem, it is simply the new reality,” Professor Spoonley says. And although 65 is the official age of superannuation eligibility, more than a quarter of those aged 65 and over are in paid employment today. What's more, “we have the healthiest and wealthiest population of over 65s ever,” he says.”

5. Where will future hotspots of regional growth be located?

We recently launched the Infometrics’ Regional Hotspots report to highlight which towns, suburbs, and parts of New Zealand are ones to watch as hotspots of population growth and development over the coming decade.  Although some places are obvious picks, there are some hotspots that may not be such obvious choices to many.  Four regional hotspots are in Auckland, with a further 6 hotspots and 3 provincial possibilities dispersed through the rest of the country.

“Even if affordability issues and stresses around infrastructure provision do end up constraining the region’s ability to grow over the medium term, the four areas we have showcased within Auckland still look to be standouts for the region.”

The “halo” effect of Auckland’s strong growth has been clearly demonstrated over the last 18 months in housing market trends across the upper North Island. Within these regions, North Hamilton and Papamoa stand out as being key growth hotspots in coming years.

In the South Island, Rolleston’s previously rapid growth has been enhanced by the westward drift of Christchurch’s population following the 2011 earthquake.

Other areas to feature in Infometrics’ Regional Hotspots report are Central Wellington and Central Otago, with Queenstown’s strong performance spilling over into neighbouring towns such as Wanaka, Cromwell, and Arrowtown.”

6. The regional diaspora is creating new challenges for employers

A survey by the EMA last year showed the proportion of employers offering telecommuting rose from 37% in Dec 2015 to 40% by the EMA’s June 2016 survey. This result comes after the December 2015 survey highlighted that 1 in 5 employers claimed house prices had affected their ability to recruit.  Here are some general comments from page 6 of the December 2015 survey:

“General comments made by employers:

- Harder to recruit from outside of Auckland region.

- Staff are leaving Auckland in particular because of high house prices.

- Potential candidates, both internal and external, from outside of Auckland are unwilling to

relocate due to high house prices.

- Pressure to increase salaries and wages.

- People wanting more flexible hours to enable a wider geographical spread.”

7. But working from home is not always endorsed by employers

In a surprising move back in 2013, Yahoo’s new CEO banned employees from regularly working from home, saying that everyone needs to physically work together in the same building.  Yahoo’s move was a shock to most, given that technology firms have typically been heralded as champions of the remote working movement.  Here is an excerpt from the Yahoo CEO’s internal memo:

“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.”

8. Technology has helped US employers beef up their regional presence

Technology is not only helping employees work from more remote locations, but is also enabling employers to beef up their regional presence.  Offices in regional settings often have lower operating costs, due to cheaper commercial rents.  Furthermore, it can be easier to attract and retain staff in regional settings that offer a good work-life balance.  Forbes wrote an article about the surprising cities in the US that created the most tech jobs between 2001 to 2013 – the winner was Austin, Texas.

“The keys to Austin’s success lies largely in its affordability and high quality of life, both in its small urban core and rapidly expanding suburbs. Best known as the hometown of Dell, a host of West Coast tech titans have set up shop there in recent years, including AMD, IBM, Cisco, Hewlett-Packard, Intel and Oracle.”

9. Xero’s new Napier office to support work-life balance

In New Zealand we have also seen cases of technology-driven businesses moving into regional settings.  For example, an EPIC innovation centre for nurturing new business was recently opened in Westport.  At the other end of the scale, Xero has announced that it will be opening a new office in Napier. Xero CEO Rod Drury says:

“It used to be that people needed to live in the major cities to advance their technology careers, but that’s changing quickly. And with the advent of the cloud, investments in fibre infrastructure technology has flattened the world to allow people who want a fulfilling job with a good life balance to do so from beautiful places outside of centres like Auckland and Wellington.

Which is why we’re proud to announce that we’re opening our next Xero office in Hawke’s Bay early next year.”

10. Even Dilbert is created at home

Even the creator of Dilbert, Scott Adams, works at home.  Although Adams once had a corporate job, he threw that aside once Dilbert took off.  He is a morning person, so likes the ease of being able to get up early and march to his own beat.  In Adam’s own words:

“I start at 5 usually, 5 in the morning. I just walk across the street in my flip-flops and pet my cat for 10 minutes so she won't bother me for the next few hours. There's kind of a toll you have to pay with a cat; if you don't pet her for 10 minutes she'll bother you for six hours. So pet the cat, get a diet Coke, eat a banana and sit down and start writing my "Dilbert" blog -- that takes usually from 5 till 7 in the morning. Then I do typically two cartoons. I do them in rough form and I'm usually done with those by 10 or 11. Then the rest of the day is whatever I have going on, which is typically contracts and paperwork and licensing and conference calls and taxes and administrative stuff. And sometimes I have time to finish up the cartoons I started in the morning. So I do all the creative stuff I do before noon usually."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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15 Comments

#1 and #2 and #6. Yes Aucklanders have been moving to the regions. Further this has been happening for many many years, albeit there has been a recent increase. It is a net figure of course, with many NZers moving to Auckland, but just more moving out. Repetitively and wrongly many common tators on Interest.co work from the assumption that Auckland is the only place that is economically attractive to work. But they need to realise that many people find occupations and setups outside of Auckland that they find really attractive - and move. The figures show that and have for a long time.

Of course Aucklanders are moving - you get $500k cash in hand when you sell your average Auckland home and buy an average non-Auckland home.
But if things in the regions were really that rosy, wouldn't every Aucklander be moving?

No Jimbo Jones and No. First the exodus from Auckland has been long standing. It's not just a phenomenon of current house prices. Second. Auckland does have it's attractions, and lots move there. It's just that more people find the attractions elsewhere attractive. Moves in both directions are right for those people. The whole of Auckland is never going to move.

This is what happens when a city decides to short supply land, there is more to come and it gets worse for Auckland. Interesting times.

This is only Stage 1 of Auckland's planned multi-stage decline into irrelevance. This migration is being led by older cashed up Aucklanders, who are moving and their movement is generating some more employment opportunities in the other regions. Overall it is an almost positive occurrence as far as NZ is concerned.

However in 2 years there will be an ample supply of housing and office space in Melbourne/Brisbane/Perth; whilst in 5 years another over supply will occur in Sydney. Auckland meanwhile is planned to have a chronic under supply until 2040. In 2 - 5 years time the good paying jobs that sustain Auckland's competitive advantage will move to the Aussie cities and all the young mobile people will move with them.

#5. Benje. You need to put a little more clarity in labelling of areas. Queenstown Lakes is one area. Central Otago is another. It's fine to use one, or the other, or sometimes join both "Central Otago Queenstown Lakes".
You map uses C.O. but the commentary uses Q.L. Confuses things for us local.
But of course both are going gangbusters.

#4 Spoonley. He seems to always work from some basic assumptions that would seem to me to be wrong. First. He thinks a population that is stable and not increasing is a failure. I disagree. Second. He sees the demographic profile shift (older people) as an issue. I don't see what the problem is.

#10 Would pay for more people to work like Scott Adams. The cartoonist made the experts look like fools.

"How to Know an Election is Over

Posted September 22nd, 2016 @ 8:59am in #Trump #Clinton

In the 2D world in which most people live, Clinton and Trump are polling about evenly, and either one could win. The 2D world is all about facts and policies and common sense. In other words – all the stuff we think we care about but really don’t.

In the 3D world of persuasion, however, the election is already over. There is still some mystery about how large the margin will be, but Trump is already the President of the United States unless something big happens in the next few weeks. How do I know that?"

http://blog.dilbert.com/post/150772972746/how-to-know-an-election-is-over

all the good houses have been snapped up in whangarei,the half decent ones are selling fast to be turned into rentals,so now there are a lot of new builds in spots like Waipu,big subdivision there only had one or two houses on it for years and now it is being extended because of demand ,if you needed one you could never get a cop but now you cant get a plumber or an electrician!

Austin of course has affordable housing, I mean at 3-4 x medium income to house price and hugh growth, low interest rates AND non/low restrictive zoning rules.

I wonder what they are doing we are not?

Massive amounts of unproductive land to build large scale on?

NZ is 1.5% urbanised so we would never be able to find any spare land for that sort of carry on.

Why do we even allow the situation where we even need to provide ever more increasing tracts of land

I don't believe that Austin, Texas, median house price is 3-4 x median personal income. It's hard to get accurate up to date figures but Wikipedia says median income is about 33K and median house price is 227K making it closer to 7x.

You misunderstand this metric. It is the relationship of household income to house prices. This gives a better indication of household incomes in that area.

I don't think I misunderstand it as I clearly wrote personal income. I think a lot of people here claim that an average house should be 3-4 times a working man's income, much like in the good old days when he had a family and wife at home to support. Do we use household incomes for Auckland prices?
I know a lot of people with million dollar plus homes with household incomes of 250K or more. Using household incomes seems dumb to me.