Property editor of the NZ Herald

Could buying this Auckland place beat renting?

Flo apartments in Avondale is to have extensive views over the Waitakeres.
Flo apartments in Avondale is to have extensive views over the Waitakeres.

Buying a new apartment in one Auckland building might work out to be cheaper than renting it, according to a big real estate consultancy and agency which is marketing units in the new project.

Pete Evans, Colliers International's residential project marketing national director, said paying off a mortgage on a unit in the new Flo Apartments in Avondale could cost $578/week yet renting the same place might be more like $520/week.

Flo is not due for completion until late next year, but Colliers is trying to get people to buy units off the plans and has issued a statement promoting the development.

Most market experts say it is far cheaper to rent an Auckland residence than buy.

The Home Owners & Buyers Association has concerns about apartments, saying that of more than 50 it checked out for prospective buyers in Auckland, Wellington, Queenstown and elsewhere, it recommended not a single one.

Nikki Kaye, Auckland Central MP and a Cabinet Minister, is also due this month to release a report expected to recommend major changes to the apartment sector after issues were raised about lack of pre-purchase disclosure, steep fees and governance issues.

Auckland has the most apartments rising, so the issues are hottest here.

Flo is a 91-unit apartment block on the site of the former Avondale RSA at the corner of Rosebank Rd and Layard St.

"Two bedroom apartments in the complex range from 71.6sq m to 78.6sq m and in price from $495,000 to $750,000, with a rental appraisal between $520 and $600 per week.

According to financial advisers Custom Financial, repayments for a $570,000 property - with bank lending at 90 per cent and a mortgage over 30 years at a current interest rate of 4.19 per cent, fixed for two years - could work out to $578 per week, Evans said.

"These figures show a strong case for purchasing over renting - particularly in the case of off-the-plan purchases, whereby buyers are only forced to front up with a 10 per cent deposit, compared to at least 20 per cent for existing apartment purchases - and up to 50 per cent when those apartments are under 50 sq m.

"Buying off the plan now locks in a purchase price while rents continue to push upwards in Auckland - so the saving in purchasing affordable new apartments compared to renting will only increase over time," Evans claimed.

Dangers of buying units off the plans came to prominence when one purchaser found a window and bed space blocked by pillars she claims were not on the plans.

The developer insisted the floor-to-ceiling pillars in the New Lynn block were declared, prompting a warning to buyers to get expert advice before buying off plans.

- NZ Herald

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