Late last year new Government and Reserve Bank rules were introduced to try to slow investor activity in Auckland.
They worked briefly and values dropped less than 1 per cent. But in the past couple of months values have risen, wiping that small drop and rising past their previous high.
Investor groups I have spoken to confirm that after a couple of months to assess the market's reaction, they now see that the market drivers of high demand and low supply still persist, so have re-entered the market.
Furthermore we have seen a re-emergence of Chinese buyers. Many backed away after the Chinese stockmarket collapse in August plus, to some extent, because of the new requirement to have a NZ tax (IRD) number linked to the country where you are a tax resident.
So the upward march of Auckland values continues, and housing becomes more unaffordable.
But wage growth has been minimal so landlords can't raise rents to match the rising prices.
As a result, rental yields in Auckland have dropped to about 2 per cent, which is extremely low by just about any measure. With the regulations to slow investor activity in Auckland in place late last year, an almost inevitable outcome was Auckland investors looking to nearby areas.
Our analysis shows that late last year Auckland investors accounted for 18 per cent of all purchases in Hamilton. After all, Hamilton is not that far down the road and offered much more affordable housing amid a growing population and local economy.
That combination of factors caused Hamilton values to surge, and the average value of the housing stock is up 25.3 per cent on last year, a $95,000 increase. Investor activity in Hamilton has since eased but it is still stronger than most other areas near Auckland.
But it isn't just Auckland investors looking further afield. Auckland homeowners are also seeking a more affordable lifestyle elsewhere. Those evacuees from Auckland are moving north to Kaipara District and Whangarei, south into the Waikato and across to Tauranga and surrounds.
Our analysis shows the effect of this Auckland money, either from investors or movers, accounts for around 20 per cent of all sales in Whangarei, Hamilton and Tauranga.
Auckland money also stretches to Rotorua but really not beyond. Stories of Aucklanders flooding the Hawkes Bay market are not founded in fact, with only around 7 per cent of activity there attributable to Aucklanders. Likewise in the Wellington region where Aucklanders account for 3 per cent of sales activity.
The only exception is Queenstown where a little more Auckland money is popping up than anywhere else south of Taupo.
The increase in almost all of the rest of the country is more of an organic increase after many years of market stagnation following the 2008 global financial crisis.
Christchurch appears to have overcooked post-earthquakes and is the only main centre showing virtually no value increase.
The flaring up of Auckland again and the increase in values elsewhere will be causing the Reserve Bank some headaches. But the options to slow the market are limited, particularly if you don't want to affect other parts of the economy.
While investors of various sorts are active participants in this market, making up 46 per cent of Auckland purchases according to our latest buyer classification analysis, slowing them may have wider consequences.
Many New Zealanders have their wealth tied up in investment property, regardless of what your personal view is on that. And wiping value from investor portfolios will wipe out wealth for many New Zealanders. Politically unpalatable is one way of describing that.
The Government and Reserve Bank will want to act. I wouldn't want to be in their shoes trying to work out what to do.
Market Watch: Jonno Ingerson, Director of research at Corelogic