Is it too late to join the urban exodus?

Top tips for auctions from the team at OneRoof.

By Bonnie Sumner of The Wireless

In a hot, windowless room in the back of the Hastings Harcourts office, close to 50 people sit in silence, nervously waiting for the auctioneer to start the bidding for three Hawke's Bay properties.

Two houses are rural and the third is a two-bedroom cross lease unit in central Hastings, a sought after spot close to Countdown and Kmart. The first country property is passed in at $950,000, the second goes for $712,000, without too much fanfare, to a very happy and excited local couple with a toddler, but the bidding for the urban property, marketed as an "ideal for first home, retirement or investment" is feverish.

In the end, two couples fight it out.

"This is the third property we've tried to get," the losing couple whispers to their neighbour as the gavel falls at $327,000. The dozen or so real estate agents milling about look ecstatic. It's beginning to feel like Auckland.

For recent arrival, Peter, too much so. He moved down with his partner and their two young children in the winter of 2017 with the hopes of being able to afford their first home together. Finding a rental, especially one suitable for kids, was challenging enough for the digital and social media coordinator, but when it came to finding a place to buy, it was nigh on impossible.

"We'd been looking seriously for some months, and it was just a very depressing experience. We're on one income at the moment – with two littlies at home – so when you see the cars driving up to open homes, you feel totally financially outgunned. Okay you can't judge books by their covers, but standing around listening to conversations you're aware that many of the people are investors and speculators. It's totally stuff like negative gearing and tax rorts, just not a fair playing field at all."

Two years ago, the median house price in Hawke's Bay was $275,000. The April 2018 REINZ house price index report now puts it at a record $445,000, an increase of 62 per cent, while the housing inventory is one of the lowest in the country, at just nine weeks.

The halo effect

Walk the streets of Napier's CBD and it's clear the town is booming. Coffee bars selling single origin Ethiopian beans sit alongside homeware stores with $318 woven baskets in the window.

It is clear that Napier, which hosts the Art Deco Festival, is booming. Photo / NZME

From November to April, cruise ships dock between the giant container gantry cranes at the port and ferry passengers into town for walking and shopping tours.

Events such as the Art Deco Festival, the Food and Wine Classic and Horse of the Year draw visitors – and potential future residents – from around the country.

Along Marine Parade, children swing and slide at the sprawling playground, or skate at the newly opened BaySkate skate park, while cyclists ride along the extensive bike paths winding beside the roaring ocean, kids in tow, stopping for a swim at the beach in the sheltered bay at Ahuriri.

Over in Havelock North, a 25-minute drive away, Te Mata Peak's walking tracks and the nearby wineries hum year round, while the Hawke's Bay Farmers' Market in Hastings draws hundreds every Sunday to its more than 50 stalls selling everything from locally made gluten-free bread to potato dosa, handcrafted timber chopping boards and fig salami.

This so called halo effect – of people moving away from the cities to the regions in the search for cheaper houses and a better lifestyle – isn't just being felt in Hawke's Bay. In Manawatu/Whanganui, the median price has increased 19 per cent since this time last year, 14 per cent in Gisborne and 9 per cent in Bay of Plenty/Tauranga - probably one of the first visible signs of this sea change.

'The Mount and Tauranga have become increasingly like Auckland'

Lucy Hunt Burke and her husband Hayden had been living in Sydney for nine years before they decided to move back to Auckland in 2014 to be closer to family after she fell pregnant with their first child.

They lasted 10 months before moving to Mount Maunganui.

Mount Maunganui and Tauranga have become "increasingly like Auckland, really expensive, with a lot of people moving here". Photo / NZME

Within six months they'd both started their own businesses – Hayden runs a building company, and Lucy provides furniture for hire, specialising in weddings.

They wanted space for their two young boys to roam, and were hoping to buy their first home, but it soon became clear this wasn't going to be as easy as they'd hoped.

"Since we moved, the Mount and Tauranga have become increasingly like Auckland, really expensive, with a lot of people moving here.

"To find a place here these days is either a reno that you have to fully put a shitload of money into or out of our price range completely.

"In the last 18 months it's just become really bustling, so many Aucklanders are moving here to get out of that rat race, but they've kind of created another one. For us to get into the property market is really hard, so we had to think outside the box."

Like first-home buyers everywhere, Lucy and Hayden are relying on help from family. They recently bought a section of land from Hayden's father in Aongatete, a 25-minute drive from Mount Maunganui, and have been turning an old existing shed on the land into their first home, which they plan to move into by July.

"It's the dream lifestyle. We're going to be commuting every day to the Mount but I've still got that Auckland mentality where driving doesn't bother me. That's just the sacrifices and choices we make."

'You've come to escape Auckland and Auckland's come after you'

There are no certain figures on how many home deposits involve a gift or loan from family, but a recent estimate put relatives as the fifth or sixth largest lender, on a par with Kiwibank.

For Peter, this became a necessity. The Napier rental they'd been living in sold to an Auckland investor in March, and they were desperate to find a home of their own.

"We don't have family here so we were running around with our children to about seven or eight open homes and by the third or fourth one they're getting pretty crazy and that evening just felt really dispiriting, because the place we rent had sold, the bomb's ticking to get out of there, and where are you going to live? You've come down here to escape Auckland and Auckland's come after you."

In the end, it was a gift from family, and the "heroic" efforts of a mortgage broker, that enabled them to buy their first home, which they plan to move into this month.

"We were cobbling together our Kiwisaver, begging, borrowing and stealing to get a deposit, you're thinking in terms of $5000 here, $10000 there, but people in New Zealand have made $80,000 to $100,000 a year from their house, so you can't compete with those people.

"When we tried to buy the house that we rent, we were scraping together what we had, it was quite pitiful really how we're going against someone who has probably got millions in the bank. No hope. So we gave up trying to get in for under $400,000, which is the Kiwisaver Homestart Grant limit for an existing home here, and prevailed upon family."

Tremains is one of the biggest real estate agencies in Hawke's Bay, selling around 70 properties a month. Owner Simon Tremain says about a fifth of their sales go to out-of-town buyers.

"Aucklanders coming down to Hawke's Bay, if they're already on the property ladder in Auckland there's no doubt when they come here they'll be able to buy a lot better homes for a lot less money, but of course if they haven't been on the property ladder in Auckland it's still going to be hard regardless of where they are because the reality of banks still wanting 20 per cent deposit."

Even cashed up buyers moving for a better life are surprised at how difficult it is to get into the market. Originally from Napier, Sophie McGrath is a full time mum to toddler Marlo and she's pregnant with her second child. She and husband Haydon lived in Auckland for nine years before they moved down in April to be closer to family.

"We wanted to live in Napier, but ended up buying in Havelock. It was a mission. We were lucky we bought in Auckland so we had quite a good budget when we sold our house to buy down here, but there was just absolutely nothing in Napier in the areas we wanted to live in with our budget.

"We thought we could buy quite well. We looked for quite a while, and there was just nothing and when there was something there was a lot of competition. It's hard, we ended up paying nearly $200,000 over CV for our place. I didn't really see myself coming to Havelock, but I guess it's better than travelling from Auckland to Napier."

'I come here and I'm pushing local people out'

So has it been worth it? No one spoken to for this article would return to the big smoke. For Peter, the lifestyle in Hawke's Bay is unbeatable.

"I'd had family down here when I was a lad, and had many marvellous summer memories of the place. The dolphins, of course, the gannets at Cape Kidnappers, Lilliput, Fantasyland, the piranhas at the aquarium.

"It seemed a great place to bring up kids - I wanted to try to give my kids that quintessential Seventies Kiwi childhood that I remember so fondly. But the deciding factor was house prices. There's no way we could ever live in Auckland again."

While this lifestyle might be the stuff dreams are made of for many Aucklanders trying to escape the rat race, the downstream effects of this popularity are hard to ignore, including pressure on the rental market.

Recent TradeMe figures put the median weekly rent in Napier at 24 per cent higher than two years ago, while the number of homeless Hawke's Bay families waiting for a state house has more than doubled. With stories of up to 60 people showing up for a rental viewing, demand is high and supply is low.

Chief executive of the Napier Family Centre, Kath Curran, says the squeeze is obvious.

"We still see families that are having to be in emergency housing and facing going into the market with rentals of well over $600 a week for a three-bedroom home. It is a tight squeeze. It's definitely also affecting working families and it just creates a lot of insecurity around home life."

Peter agrees, and says he feels guilty for being one of the new arrivals putting increasing pressure on the housing stock.

"I'm a refugee from Auckland, I come here and I'm pushing local people out, and where are they going? It's not a good situation, and the sooner all the tax rorts come to an end and people stop expecting to make $100,000 a year just by owning a house and pocketing that, the better.

"If you're on any kind of an average income no matter how hard you save and work, you can't save $100,000 probably even in 10 years, it's so distorted and wrong."

But for people like Peter who have made the change, the benefits of living in the regions far outweigh city life, despite the challenges of entering the housing market.

Lucy says she would never go back.

"We hated living in Auckland, we couldn't get our heads above water, we were in the grossest flat. Just cold, damp, not somewhere you want to raise a child.

"We knew we couldn't afford to buy there; it just wasn't an option for us.

"I still have friends in Auckland but most of the people I know who live there don't have kids, so they still flat or they can buy a really small home and not worry about kids clawing at the walls. Here the kids can run around. I would never choose another lifestyle anymore."