Independent economist Tony Alexander says this tendency was turbo-charged by the Reserve Bank in 2015 when it temporarily applied a higher minimum deposit requirement for investors buying in Auckland than elsewhere.

Aucklanders flocked to other locations where their deposit could stretch to buying a house no longer accessible nearby.

“Seeing the impact of their actions the Reserve Bank’s next change in July 2016 was to require a 40% deposit for investors everywhere in the country.”

Alexander says the tendency to buyaway was already there and remains today.

“This is one reason why despite not having the shortage of houses Auckland has had from 2005, the regions followed Auckland’s price surge from 2012-16 and average house prices doubled.”

In the regions, Dunedin’s population has risen by 17% and average prices have gone up by 795%. The population in the Tasman region has risen 66% and house prices have gone up 485%. The West Coast’s population has gone up 3% and prices have gained 436%.

Alexander says it should be noted that population growth alone is not the key determinant of house price changes around the regions and investors should not base their buying choices on it, but it is still a key factor for some.

One investor told Alexander he used this buying guide for investment properties:

“For a $1 million house in Auckland, renters could not pay more than $600 per week. If I bought four houses in South Canterbury (Waimate, Temuka or Geraldine), that would cost $1 million in total, and the rent returns on each property would be $300 per week, totalling $1,200 per week. Yes, not as much in capital gains but some people (like us) want a cash cow and are not really interested in capital gains, such as in Wellington and Auckland.”

Adding to the overview, Alexander says the total population is projected to grow by 27% between 2018 and 2048. For Auckland growth of 39% is projected, Wellington 16% which is only just ahead of Manawatū-Whanganui at 12%.

For all of New Zealand, excluding Auckland, population growth of 21% is projected.