Kirsty Wynn is a senior reporter at the Herald on Sunday.

Apartment sales take off - the new property boom

Buyers turn to bigger, more expensive apartments as alternative to house in suburbs.
Building consents for apartments have increased tenfold in five years and figures show one in five people buying apartments are switching from a house. Photo / Supplied
Building consents for apartments have increased tenfold in five years and figures show one in five people buying apartments are switching from a house. Photo / Supplied

Home buyers are turning their backs on traditional suburban villas, sparking a boom in apartment living.

Building consents for apartments have increased tenfold in five years and figures show one in five people buying apartments are switching from a house.

Developers say they are battling to keep up with demand for large, luxury flats. One block of 59 is still under construction but all but three apartments have been sold.

And industry experts say Auckland is witnessing a sea-change in mindset, placing us more in line with European cities, where apartment living is the norm.

Mark Todd of Ockham Residential, which is building the Hypatia on Khyber Pass Rd, said the growth in the high-end apartment market was partly driven by baby boomers looking for somewhere to live rather than to invest in.

"It's a market that is growing at about 100 per cent a year but it is not a market catering to the first-home buyer," Mr Todd said.

"These apartments are expensive because it costs a lot to build them."

Figures from Statistics NZ show fewer than 200 building consents for individual apartments were issued in 2011. In the 12 months to March this year, that figure reached more than 1900. The vast majority are in Auckland City.

In February, building consents for apartments outnumbered housing consents by 163 to 16 in the Waitemata and Gulf area, which includes Auckland City, Parnell, Herne Bay and Grafton.

Industry experts say factors driving the boom include affordability, traffic congestion, lifestyle, better quality builds and relaxed bank lending rules.

Industry experts say factors driving the boom include affordability, traffic congestion, lifestyle, better quality builds and relaxed bank lending rules. Photo / Supplied
Industry experts say factors driving the boom include affordability, traffic congestion, lifestyle, better quality builds and relaxed bank lending rules. Photo / Supplied

QV homevalue northern manager James Wilson said quality builds held their value and had fewer issues typically associated with apartments, such as weather tightness and cramped quarters.

"High house prices have fuelled demand for apartments and led to a change in mindset by some Aucklanders, who now see them as a viable option for the owner-occupier seeking to live in a central location."

The average dwelling value in Auckland Central, which is mainly apartments, is about $450,000, compared with the regional average of $940,000.

"Apartments offer a more affordable housing option than a stand-alone home," Mr Wilson said.

But while first-home buyers make up the bulk of the market, the growth area is high-end luxury where the cost is $1 million-plus - still much less than a city fringe do-up.

Buildings currently under construction come with the promise of swish rooftop spaces, lap pools and light-filled living. All have the city's best schools, restaurants, parks and entertainment on their doorstep.

It's a market that is growing at about 100 per cent a year but it is not a market catering to the first-home buyer.
Mark Todd, Ockham Residential

At Grace Victoria Quarter on Sale St, more than half of the apartments were snapped up in the first four weeks. The development includes 107 apartments and three "skyhomes" priced from $705,000 to $2.36 million.

In Remuera, breast surgeon-turned-property investor John Harman has pre-sold 80 per cent of the 59 luxury apartments under construction on the site he owns on St Marks Road. Apartments there range from $680,000 to more than $6 million, and just 13 remain. Across the city, Mt Eden Botanica Heritage boasts warehouse and loft-style apartments inside the industrial facade of a 100-year-old character building. Six of the 16 apartments are already under contract.

"We have noticed a real shift in the profile of the apartment buyer, with most now owner-occupiers wanting much bigger spaces," said real estate agent Duncan Macdonald from Colliers.

"There is big demand from downsizing baby-boomers, who have the ability to have a nice apartment in the city and perhaps even a bach."

The latest QV.co.nz E-Valuer figures show apartment-dense areas of Auckland Central and Eden Tce have seen median values rise 21 per cent and 18 per cent respectively in the year since May 2015. The Auckland region overall rose 16 per cent.

Data from CoreLogic shows one in five apartment sales are to people moving out of a house.

Sales are also being buoyed by relaxed lending for apartments. A spokesman for the BNZ said there had been an increase in mortgages to both owner-occupiers and investors.

- NZ Herald

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