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BusinessSeptember 14, 2020

Here’s why more Aucklanders should move to Christchurch

Auck_Chch (3) (2)

They’re two cities with identical amenities, identical schools and equally beautiful hinterlands. So why don’t more people choose the one where houses are half the price?

A friend with a young family just bought a house. It was old, and needed a bit of work, but it was in a good school zone. It cost him over $1m.

Another friend bought a house. It’s brand new and he helped design it and fit it out. It has a large section and is near decile 10 schools. It cost less than $500,000.  

The difference? The first friend bought in Auckland, the second in Christchurch. The discrepancy is not an anomaly. Data from Reinz (the Real Estate Institute of New Zealand) shows the median house price in Auckland city in July 2020 was $1,007,000, whereas the median house price in Christchurch city was $491,000. It hasn’t always been this way either. Reinz statistics 10 years ago showed the median price in July 2010 was  $482,500 for Auckland city and $327,500 for Christchurch city. So why has the difference widened so much in recent years?

Good planning at play?

Sam Broughton was elected mayor of Selwyn District, which borders Christchurch, in 2016 at age 35. He has the seen region’s population boom post-earthquakes yet the house prices remain considerably more affordable than Auckland’s. He says a lot of it comes down to preparing for the growth before it arrived.

“The ability for us to continue to provide affordable housing is due in lots of ways to good planning, strategic planning between the three councils – Waimakariri, Christchurch and Selwyn. We identified the places where we wanted growth to happen.”  

Whether or not Auckland could have alleviated its outrageous house prices through sound planning, the bizarre fact remains that if you sold a $1m house in Auckland and moved to Christchurch, you could buy a better home for half the price. It might even be mortgage free, if you brought enough equity with you. Meanwhile, Statistics NZ data shows the average weekly earnings in Christchurch are comparable, while the salaries of many, like teachers, are virtually the same. 

Christchurch has been through a lot, but after many years of rebuilding it has begun a new, exciting chapter. A growing number of tech jobs, South Island beauty, the ability to ski and surf in the same day and a burgeoning community of entrepreneurship and arts make it an increasingly attractive place to live.

New Zealand’s lockdowns have illuminated the ease and practicality of remote working for thousands of companies and workers. No longer should distance and region have such an influence on where people choose to live and buy houses. It’s now possible for someone to settle anywhere in New Zealand, and with the right internet connection, carry out the job with the same – or even more – productivity. 

So shouldn’t more Aucklanders be taking advantage of this?

(Graphic: Supplied)

An Aucklander’s perspective

Co-author of a book called Generation Rent, economist Shamubeel Eaqub has been considering these issues for years. An alumnus of Lincoln University on the outskirts of Christchurch, Eaqub says most people do not choose to live in Auckland because of its house prices or congestion, but in spite of it.  

“It may be emotional, but there is also some logic. The work and city magic that happens here just does not happen anywhere else. Large and dense cities foster serendipity – I bump into people I hadn’t planned to see. They may lead to new work opportunities, investments or friendships.” 

Essentially a bigger city means more people, so there are more chances for connections. But isn’t that density part of the problem with housing?

“Auckland’s housing market is awfully broken,” Eaqub says. “Our cities may have some parochial rivalry, but really each serves a unique and complementary role. Christchurch is the ‘capital city’ of the South Island. Wellington is the political capital. Auckland is the commercial capital.  We need each to work well.”

But why are parts of the housing market broken? Chris Glaudel, deputy chief executive at Community Housing Aotearoa, argues that the problem is that housing itself has turned into an investment commodity. He says we have lost sight of the original purpose of housing: to provide a home. As a result there are other flow on impacts such as developers across the country not building the smaller units that we actually need, less of a focus on shared home ownership or other housing options and more than 18,000 currently on waiting lists for social housing.  The house price difference is a symptom of a broken system that needs change.

Covid and international returnees

The Covid-19 pandemic and its management by certain countries has created global uncertainty. All at once, waves of New Zealand’s international diaspora will be looking to return to the relative safety and stability of home.

When they do, where will they go? I returned with a young family to New Zealand a few years ago. The possibility of a considerably lower mortgage and a virtually identical salary made the choice of Christchurch pretty easy. However, it is likely that compared to global cities like New York, London or Tokyo, even Auckland prices will seem cheap, fuelling more demand for our largest city.

Then there are the other regions of New Zealand that are even less expensive than Christchurch. The West Coast is stunningly beautiful and has an average house price even lower than Canterbury. Ōamaru in North Otago has an eccentric vibe, steampunk aesthetic and easy reach to lakes, rivers and mountains. Reinz reports that for the three months ending July 2020, the Ōamaru ward had a median price of $346,500. The price differential gets even more extreme when you get more rural and into places like the Mataura ward in Southland, where the median price is $159,000.

The shape of the future?

The house prices and opportunity in the Canterbury region provides a compelling case for more movement from Auckland. But perhaps this is ultimately about recognising the tension between a logical decision and an emotional attachment. After all, with a looming recession creating a climate of immense uncertainty and upheaval, people may be wary about making such a move, even if it is in their financial interests. On the hand it may be just the thing to prompt more people to explore their options.

There is far more at play than just numbers. Yet returning to my two friends: the $500,000 or more difference in their houses is certainly going to impact both their debt and stress levels. Covid-19 has woken many of us up to our perceptions on life and how we want to live. Time will tell whether that will influence where we want to live too.

Keep going!