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Home / Business

Aucklanders stamp big mark on Tauranga's billion dollar property market

Carmen Hall
By Carmen Hall
Bay of Plenty Times·
23 Jul, 2016 10:00 PM4 mins to read

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More than $1.5 billion of property has been sold in Tauranga this year with 18 per cent of sales to Auckland investors or Aucklanders moving to the city, new figures show.

More than $1.5 billion of property has been sold in Tauranga this year with 18 per cent of sales to Auckland investors or Aucklanders moving to the city, new figures show.

More than $1.5 billion of property has been sold in Tauranga this year with almost 1 in every 5 properties snapped up by Aucklanders.

Core Logic figures released to the Bay of Plenty Times Weekend, show Auckland investors and Aucklanders moving to the city accounted for 18 per cent of sales so far this year.

The split between Aucklanders investing and relocating was even with each accounting for nine per cent of the sales - compared to four per cent each, in 2012.

Senior research analyst Nick Goodall said the increase in the number of "Aucklanders both moving and investing in Tauranga property influenced the market, not only by adding to the demand for housing, but also due to their purchase behaviour".

During 2015/16 the average Auckland mover cashed up by $285,000 as they downsized in Tauranga, he said.

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Auckland investors were also likely to pay 2 per cent more than any other buyer group he said, "showing the extra buying power they have when leveraging capital gained from strong Auckland property increases".

Meanwhile data from the Real Estate Institute of New Zealand revealed 2554 properties in Tauranga sold for $1.54 billion in the year to the end of June compared to 5259 houses in 2015 that fetched a total of $2.62 billion.

Tauranga Harcourts managing director Simon Martin said the Auckland market was solid because "Tauranga is a pretty desirable place to put their money or move to".

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Aucklanders were most active in the $500,000 to $550,000 price bracket, he said.

Ray White Realty Focus in Mount Maunganui and Papamoa owner Greg Purcell said agents were still fielding strong inquiries from Aucklanders and he did not expect that to slow despite tough new lending restrictions on investors, which meant they would need a 40 per cent deposit from September 1.

In fact the situation could spur potential vendors to list, he said.

"It will all stop when there are more houses down here than people wanting to buy them, it's market forces of supply and demand. It's as simple as that really."

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Ross Stanway, chief executive of Eves and Bayleys Real Estate said Aucklanders "are here to stay and that is likely to continue for some time yet".

They were prepared to pay higher prices and were buying investment properties to rent or get a stake in the market.

Some would shift and start businesses while there was "a younger Auckland buying group that are coming here for careers and the employment numbers in our region have increased significantly".

New Zealand Certified Builders Association chief executive Grant Florence said the Auckland presence had a "domino effect".

"I know that is still having an impact on the demand levels. I did some work today on future demand levels and if you crunch the numbers into household units and future demand levels, we think we are building lots of houses.

"But we have got more to do, we aren't even standing still."

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Tauranga Property Investors Association president Grant Harris said Tauranga had seen a clear "trickle-down effect" from Auckland.

"Increased demand from Auckland buyers makes for a more competitive market and we have seen that increased demand driving house prices up. That is a negative for local investors, owner occupier and first home purchasers currently looking to buy property as they are having to pay more to secure property."

Rising house prices would affect the investment return available on residential investment properties depending on the rental return for the property, he said.

Statistics from Trademe showed the average median rent in Tauranga climbed from $340 in June last year to $450 this June - a hike of 17 per cent.

Priority One business relocations manager Max Mason said over the last six months 47 per cent of the businesses the organisation had been working with came from Auckland.

"In terms of contact from individuals that want to move to the area and find work, I would estimate that around 70 per cent come from the Auckland area."

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Quotable Value chief marketing officer Justin Snarski said the average property value in Tauranga had climbed from $428,943 to $599,915 since 2013.

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