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.
Population growth
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.
Employee growth
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.
31 Comments
Any Jafa with a brain would be looking to leave the chaos that is AK today, and you couldn't blame them. the problem is as this article identifies businesses do not seem to have the same perspective. Tauranga has long been considered to be the next Auckland, but IMHO is not far enough away, as the same maladies that impact Auckland are beginning to be felt there too. The major centres Auckland, Hamilton, Wellington, etc. all have a natural gravity, but all also have the same problems -cost of living, traffic congestion and so on. Many business's would significantly reduce their basic operating costs by moving to even smaller centres where their employees would have a better living standard. Business's would be well served to step outside the box and try further afield.
It's not really as simple as just moving.
Employees can't move towns unless there is work.
Employers can't move towns unless there are people/resources to do the work.
You also have other aspects to think of. Family, Friends, Lifestyle, etc...
Having moved cities/countries a few times, it is not as easy as many people think.
Moved to Wellington last year, commute time 10 mins, office rental 75% cheaper, rent 25% cheaper, smiling healthy people with lots of kids in tow 100%. Unfortunately the boomer Auckland brigade has arrived with their wallets and gold cards..buying up everything in town.
The invading Jafa investor is to Wellingtonians what the Chinese foreign investor is to the Jafas. Same goes for Tauranga and Hamilton. It is not Jafas moving to other cities, they are simply borrowing 100% against their Auckland properties and investing in the provinces and Wellington.
Intelligent, well-educated and creative people like to be surrounded by others like them, and receive some sort of external stimuli beyond discussing how much milk the cows are producing this season. Cities have been engines of creativity and progress since the day humans worked out there was something better than the nomadic life.
They might like to visit them, but the provinces are too boring for most people to spend all their time in. Companies won't move their offices to smaller areas, as they know the calibre of staff they can attract would be lower. The same dynamic explains why there are so few takers for rural doctor jobs, despite massive salaries offered.
We can conclude that the "Auckland sucks" brigade are missing a few neurons.
"as they know the calibre of staff they can attract would be lower" Total rubbish, there are a lot of very talented people in the provinces just looking for an opportunity without having to get tied up in huge traffic jams! The problem opportunities are limited so most don't get to test their true capabilities.
No more of a generalisation than in the earlier posts.
Quality of life these days is pretty reliant on a good income - it also depends on what "qualities" you like.
International concerts, theater, top restaurants, easy travel overseas, better variety of shops, career path, family, friends, not all of these exist in the provinces.
Brutus and Noncents. You forgot a few facts. Net internal immigration in New Zealand is out of Auckland. Yes Out - for many years now.. I'll put it simply for you. Lots of people move from the regions to Auckland - Yes. But more than that number move from Auckland to the regions. (Auckland is growing, but people from overseas)
These internal moves are because of people preferences and neccessity.
I accept your preference. But obviously you can't see that voting by the feet indicates that the greater preference for new Zealanders is to move away from Auckland.
So are the people moving from Auckland Kiwi citizens? or migrants landing in Auckland then moving on?
Anecdotal I know - But here in New Plymouth I am not seeing many Kiwis arriving. Most are leaving for the bigger cities (Auckland, Tauranga, and Wellington) for work.
I don't know who the people leaving Auckland for the rest of New Zealand are Noncents. Sorry. But the stats still show that the net "Rest of New Zealand"/ Auckland movement is out of Auckland. That's "Net" meaning lots are moving in for sure, but more are moving out.
ODT news this morning is the population boom in Cromwell. Shortage of sections and people waiting for builders. So clearly people can get a job there.
I don't think that a story that particularly is Auckland related. And you should think of Wanaka/Cromwell/Queenstown as one place these days. The new 'Inland City"
Read: stuck up people who think they are superior to others only like sharing company with others of a similar mind. If there was “nothing to do in the regions” why do places like Taupo explode over the summer months and the same to be said for winter (skiing)?
Your post reeks of a superiority complex.
Maybe, but you've exactly proven my point. Population explodes during the tourism seasons (international and domestic). Aucklanders blow off some steam, enjoy the outdoors, and then return home.
What i'm sick of is hicks from the rest of the country bagging JAFAs and saying how "overcrowded" and crap Auckland is, based on a once in five year visit. There are certainly things Auckland can't provide - that's why Aucklanders travel to enjoy the rest of the country - but similarly there are plenty of things Tauranga/Taupo/Nelson/Whangarei can't provide.
I'm also sure that rural NZ'ers disdain for Auckland is entwined with prejudice against immigrants/non-European NZ'ers.
People return home as annual holidays run out its hardly rocket surgery. Correlation /= causation.
Again, branding the rest of the country as simple minded (hicks) is the same attitude that rightly earns you the title JAFA that "you are sick of". Change your attitude and we might change our opinion of you.
"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 (data sourced from Statistics New Zealand)"
Data source shows estimates/predictions, to my knowledge there is no way of measuring internal migration other than the census data, so the size of the population flow from auckland to other north island cities will only become apparent in a few years time after the next census.
Yes Simon - the census is the way and for many years now it has shown the net internal migration in New Zealand is out of Auckland. The only way that Auckland avoids a falling population is because of the immigration from overseas.
I can't think of a reason why we would arrange it like that.
Mind you, as one of those so called provincials from way way down south, and who was an Aucklander many decades ago it's clear to me why. Better jobs, more jobs, bigger income, better facilities, better society, better life, better environment - all right here in Central Otago.
We moved to the Wairarapa a year ago. It has been a bit of a culture shock for us and it feels like we have gone back thirty or forty years in time. People actually take time out of their day to talk to you- and are interested in what you are doing. Customer service is different too, people are friendlier and less self absorbed, and are more likely to make an extra effort for you. I'm not sure if this is just my imagination because I'm more relaxed and yes, people do seem to be less stuck up here.
Yeah my neighbour knows almost everyone here it seems, which is bloody handy sometimes. I guess it pays to keep your reputation untarnished too, arseh0les would get lonely really quick.... We found that in the city we were so money/ house/ job focussed and we wanted to take a step back and concentrate more on family, fitness and hobbies :o)
People have always been attracted to retirement centres such as Tauranga. What is different is the advent of the baby-boom retirees, who are seeking out places with sun and scenery to move to. In the winter months, some can travel to the UK and earn a bit of extra cash if they have an EU passport and an HT licence. The reverse migration also applies, if the retiree is a Brit and has a NZ residence visa.
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