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Property editor of the NZ Herald

Buy an Auckland apartment: Is Prime Minister John Key right?

Prime Minister John Key says young Aucklanders must consider choosing an apartment as their first home and a search of listings showed more than 1000 for sale.

How much are the city's units going for? One CBD realtor's reports are telling. City Sales regularly release data from auctions and last month said a unit in Zest in the CBD went for $345,000, a unit in Alpha apartments in Vogel Lane went for $595,500 while a place in the Quest Parnell went for only $155,000.

In July, a 48sq m apartment in Forte went for $440,000 and a 41sq m place in Quadrant went for $531,000, it reported.

Last month, a unit in Eclipse sold for $525,250. A 2-bedroom unit in Ascent at 149 Nelson St went for $360,000 in June, while a two-bedroom place in Westmount at 23 Upper Queen St went for $352,000, City Sales said.

That is one end of the market. On the weekend it was announced that an Alexandra Park penthouse (in a complex yet to be finished) pre-sold for almost $5 million.

Apartment living is not just about the purchase price. Annual body corporate fees can range from a few thousand dollars to tens of thousands and can rise steeply with building issues such as remediation, litigation, disputes or expensive maintenance demands.

Key told Newstalk ZB's Leighton Smith last week that young Aucklanders need to look to apartments as a first home option as they do in big Australian cities where people in their late 20s did not expect to buy a house.

Ockham Residential is one of the more active Auckland apartment developers and Helen O'Sullivan, chief executive, agrees with Key: ""There are medium density options in Auckland that are affordable for first home buyers." Places in Ockham's new Daisy in Mt Eden are selling for $445,000 to $655,000 she said.

Daisy, a new development by Ockahm in Auckland. Photo/supplied.
Daisy, a new development by Ockahm in Auckland. Photo/supplied.

O'Sullivan said 46sq m one-bedroom apartments without carparks but with 8sq m balconies at Set beside Avondale Racecourse are selling for $430,000, with larger places going for $820,000. Half the entire block has already been sold off the plans.

"We have 13 apartments at Set for under $500,000, 17 for $500,000 to $600,000, 27 at $600,000 to $700,000 and 15 at $700,000 to $820,000. The $430,000 is a chunk of money in anyone's language. Banks will loan up to 90 per cent of an apartment purchase price in some parts of Auckland," she said.

Set, a new development by Ockahm in Auckland. Photo/supplied.
Set, a new development by Ockahm in Auckland. Photo/supplied.

O'Sullivan said prices were yet to be finalised at Bernoulli Gardens, another Ockham apartment planned for Hobsonville Point. Those interested are only being asked to register their interests at this point, O'Sullivan said.

Bernoulli Gardens at Hobsonville Point. This is a new apartment block by Ockham where prices are yet to be finalised. Photo/supplied.
Bernoulli Gardens at Hobsonville Point. This is a new apartment block by Ockham where prices are yet to be finalised. Photo/supplied.

Friday was the third time in as many years that Key referred to apartments as a solution to house buying for Aucklanders. Herald headlines were:

October 14: PM's first home advice
May 2015: Apartment living gets Key endorsement
Friday: Young Aucklanders need to look at apartments as a first home option

"I tell you where their first house is - it's an apartment... that is the reality of a first home for a young couple in Australia and many other parts of the world," Key said on Friday.

"We are going through quite a big change as a society, I think in these fast growing areas where it is quite likely that people will start in apartments, it's more than likely they will move out to a house with a little bit of land as they have children, and they will very likely move into an apartment as they retire. You are seeing the market responding. The quarter-acre section is less prevalent," Key said on Newstalk ZB.

I tell you where their first house is - it's an apartment... that is the reality of a first home for a young couple in Australia and many other parts of the world.
Prime Minister John Key

Opponents say even Auckland apartments are too expensive. Metiria Turei, Green Party co-leader, said Key would not make a very good real estate agent because he did not know the market.

"Most young Aucklanders I talk to long ago gave up on the idea of a quarter acre section and would be happy with an apartment for their first home. The problem is apartments get snapped up by investors, who get a free ride to exploit loopholes and make huge capital gains under this Government," Turei said.

See a promotional video showing off the 'Daisy' building:


Nick Smith, Housing and Building Minister, said earlier this year that by around August, officials would report back on issues with apartments. Nothing has emerged yet.

That followed a campaign by Auckland Central MP Nikki Kaye to clean up the sector, addressing issues around the pre-purchase disclosure regime, governance, management and controls on body corporate managers or secretaries.

The problem is apartments get snapped up by investors, who get a free ride to exploit loopholes and make huge capital gains under this Government.
Green Party co-leader Metiria Turei

The Home Owners & Buyers Association did due diligence on about 60 apartments throughout New Zealand for its clients and recommended not a single purchase due to many issues with apartments.

Martin Dunn, City Sales managing director, has raised concerns about banks' long-held lending policy to restrict the amount they loan on apartments of under 40sq m.

Arthur Grimes, a former Reserve Bank chairman, wants the Government and Auckland Council to enact policies to deliberately collapse the city's house prices by at least 40 per cent and intensify building along Tamaki Drive with Gold Coast-style towers. He said in July that the city's eastern suburbs should have high-rise residential blocks, ready for the next generation.

- NZ Herald

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