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Affordability, Tenant Confidence and High Returns Continue to Drive Auckland’s Apartment Market

By Sammie Johnson

Auckland’s Apartment Market remained buoyant throughout December with continued interest from investors across the Nation, and first home buyers remaining active in the inner-city and city fringe areas.

We’re also seeing an influx of local students starting to snap up inner-city apartments to rent before University starts back, filling the temporary void created by the absence of overseas students. In this current climate, we are seeing investors pick up apartments with favourable net returns ranging from 5%  up to as high as 14%, providing some of the best returns on investment available in the country.

The early re-introduction of LVR restrictions from a number of the major banks prior to the Reserve Bank’s formal reinstatement on 1 March has spurred investor enquiry and sales for both freehold and leasehold apartments of all sizes which is encouraging. 

Our Auction numbers spiked in December with our City Apartments team holding a record number of auctions as many owners looked to cash in on the current heated market, maximising the opportunities  and competition at present.

With bank lending rates continuing to fall, and Auckland Central remaining the most affordable suburb to live in in the country’s largest City, we anticipate demand for apartments to remain strong for the foreseeable future.

Whether you’re considering Buying, Selling or looking at your options regarding the Management of your Rental Property, one of our Specialist Auckland CBD Apartment team would love to chat with you.

Auckland’s only sub $500,000 bargains left are Auckland City Apartments –

Buyers trying to find affordable homes in the hot Auckland property market are best to settle in the central city. According to the latest data from OneRoof data partner Valocity, it is the only part of the city where median property values are below $500,000.

Auckland Central is the most affordable place to buy, as its median value for December reached $490,000 compared to wider Auckland’s $1.21million. Valocity’s head of valuation innovation, James Wilson, says the value growth in Auckland is driven by two regions: city central and Papakura, which are up 11.2 per cent and 10.2 percent respectively.

The Auckland housing market isn’t showing signs of slowing down, with more suburbs joining the million-dollar club, Auckland central apartments remain the easiest path way into Auckland property ladder this year? Director of Ray White city apartments, Daniel Horrobin, says the city will always remain affordable compared to other suburbs.

Affordability is a big factor to first home buyers and investors’ activity, he says.

“This year we will also see a bigger demand from investors coming into the city for affordability as we have good supply there but I think prices will start to rise on that side of the market throughout the year,” Horrobin says. A one-bedroom apartment with a carpark in the city can cost under $500,000 and has a lot of interest from first home buyers. He says more the compact, and often lease hold, apartments are sold to investors, who are also very active in the central city.

“We were getting returns of about 14 er cent on leasehold properties this year with good cash flow opportunities for investors,” Horrobin says. One of the Ray White agents selling apartments in the city, Adam Gurr, says it is the most affordable area to secure property in 2021.

However, Gurr is sure that even that affordable apartment market will rise in value, putting his estimate at five to ten per cent growth in the next year.  “Normally, wherever there’s a boom in the residential market, which we are essentially in the middle of, it’s inevitable that the apartment market follows the suit in the next 12 to 18 months,” Gurr says. He adds: “We haven’t seen a massive surge in prices, however, due to increased vacancy rate and reduced rent expense per week. That’s a result of not having international visitors and international students in Auckland City.”

Once the borders are open, the apartment market will pick up at the “drastic” pace as people living overseas value the city lifestyle, he says. Right now, about 20 percent of apartment enquiries come from overseas, which is the highest interest Gurr has seen in a while.

“I have a lot of expats coming back home enquiring because they are used to living in an apartment.”

Valocity’s Wilson says nearly 80 percent of Auckland suburbs showed growth since the lockdown. Values in just seven suburbs have softened, including under million-dollar Eden Terrace and Grafton.

With housing stock of mainly terrace houses and apartments, Grafton had a drop of 3.7 per cent since the lockdown and has a current median value of $547,000. However, that figure is still up $77,500 from a year ago. Neighbouring Eden Terrace, site of construction of the new Mount Eden CRL railway station, is less affordable. Its current median value of $700,000 is a minimal tiny post-lockdown drop of 0.2 per cent.

At the other end of the scale, Botany Downs the sprawling suburb in south-east Auckland is leading the way in growth post-covid with 20.2 percent climb in median value to $1.29million. Closer to town, the rapidly densifying Kingsland, had 19.8 percent growth. The suburb just ten minutes away from the centre of the city, next to Eden Park, now has a median value of $1.575million, a year-on-year growth of $355,000.

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