By Jenée Tibshraeny
Productive Aucklanders, weighed down by the city’s unaffordable housing and traffic congestion, are flocking to the greener pastures of the Waikato and Bay of Plenty.
This is the kind of rhetoric media reports and anecdotal evidence would make you believe. ‘Living the dream Tauranga style’, ‘Tauranga’s unstoppable rise’, ‘Garden World caters for Hamilton’s new arrivals’, are just some of the headlines you may have spotted over the last month.
After all, Real Estate Institute of New Zealand figures show house prices have increased by 33% in Tauranga and 25% in Hamilton over the year to February, as sales volumes across both regions have increased by 17%.
The BoP sported the strongest job growth in the country last year, with over 800 new jobs created, according to the region’s economic development agency Priority One.
Furthermore, a drive through the once outer Tauranga suburb of Tauriko will have you in shock.
During a trip to Tauranga (my hometown) over Easter, I noticed the 2,081 sections in The Lakes subdivision fast filling with new houses. The Bay of Plenty Times reports 194 sections were snapped up within 48 hours of hitting the market in August last year.
The first stage of the massive 44,000m² Tauranga Crossing shopping centre, next to The Lakes, is looking impressive and is due to open in September.
Buildings are popping up in the Tauriko Business Estate – supposedly one of the “biggest industrial parks in Australasia”. Brother New Zealand for example, has relocated its head office and warehouse from Wellington to the site, only 10km from the Port of Tauranga.
And that’s only in Tauriko – a look at the kiwifruit industry, the Port of Tauranga, the development in Papamoa, or the work Tainui Group is doing – will paint a similar picture.
So the questions remain: To what extent are large corporates, entrepreneurs, manufacturers, and other movers and shakers moving from Auckland to the likes of Tauranga and Hamilton?
Is talk about their shift overblown?
Is the Auckland housing market in for a fall, or much slower growth rate, as productive people leave the city?
While it’s difficult to quantify the number of people who have moved from Auckland to Hamilton or Tauranga over the last few years, the stats that are available indicate Auckland isn’t losing a significant number of workers and business investment to the regions on its doorstep. The movement of retirees out of Auckland is a different story for another day. I’ve touched on it here before.
A large number of people may be leaving Auckland, but there are a whole lot more arriving from overseas and within New Zealand, as you can see in this chart (predictions sourced from Statistics New Zealand):
Geographical business location growth
Figures from Stats NZ also show the growth in the number of new shops, offices, factories, or other business locations in the Waikato and Bay of Plenty isn’t anything to write home about.
The number of “geographical units” or physical sites that represent businesses, haven’t grown more quickly than the national rate over the last few years (note Auckland will have a large impact on the national rate).
From 2014 to 2015, the number of business sites in the BoP grew by 1.3%, the Waikato 1.4%, Auckland 2.9% and the whole country 1.8%
In the previous year, they rose by 2.5% in the BoP, 3.0% in the Waikato, 4.5% in Auckland, and 3.3% across the country.
What’s more, at 34,209, the BoP had fewer business sites in 2015 than it did in 2008 and 2009.
There isn't anything earth-shattering about the changes in the number of employees in the BoP and Waikato.
Stats NZ figures show the number of people employed in 2015 compared to 2014, increased by more in Auckland and the BoP, than it did in the Waikato and throughout the rest of the country.
It grew by 2.9% in the BoP, 2.1% in the Waikato, 3.7% in Auckland and 2.3% nationally.
There was less variance in the growth from 2013 to 2014 between the different regions, even though the growth rate was higher in the BoP and Waikato than it was in Auckland.
Non-residential building consent growth
Non-residential building consent data likewise goes some way to backing the theory that Auckland isn’t losing a significant amount of business investment to the regions.
The amount of money businesses and government departments have pledged to spend on buildings they’ve received building consents for, has increased to an unprecedented amount in Auckland, yet has been fairly moderate in the Waikato.
The value of non-residential building consents issued in the BoP hit a new high for the region last year, however this could be skewed by one or two major investments, like the re-developments at the Tauranga Hospital.
The number of buildings consents issued to businesses and government departments in the BoP grew to 339 last year, from 301 in 2014, and 248 in 2013 and 272 in 2012.
Growth in regions hot, but not fiery enough to affect Auckland
While these are only three kinds of measures of business activity (which have a number of limitations), they go some way to disproving some myths that a significantly high number of working-age Aucklanders are relocating themselves and their businesses elsewhere.
You can’t deny it – growth in the BoP and Waikato is high overall. Yet these regions aren’t expanding at the expense of Auckland, which is the main beneficiary of the record external migration New Zealand’s undergoing.
The increase in the level of business investment in the BoP and Waikato doesn’t match the high level of activity the regions’ property markets are experiencing. This could be because a number of those buying property in the BoP and Waikato are investors and retirees, rather than working people.
And this is where Aucklanders are having an impact. Because the Reserve Bank introduced restrictions last November meaning borrowers need a 30% deposit for a mortgage loan secured against Auckland rental property, thus driving some Auckland residential property investors to the provinces.
Even if some Auckland workers opt to buy houses in the BoP or Waikato, the level of housing demand, triggered by migrants arriving in Auckland, is more than enough to keep the market hot until supply really ramps up.