Property editor of the NZ Herald

Auckland apartments: how's the market?

City Sales' auction results show activity levels
Apartment auction results are being released by City Sales. Photo/Doug Sherring
Apartment auction results are being released by City Sales. Photo/Doug Sherring

Prime Minister John Key says first-home buyers should consider buying one, the Reserve Bank of Australia has issued a warning about them, so how's the market for apartments?

Information from one agency, City Sales which specialises in that market segment, gives an indication.

That business based on Karangahape Rd is releasing data from its regular auctions, giving information about places going under the hammer, what is selling, prices being achieved and what amenity the places have such as car parks.

Apartment construction is being watched closely on both sides of the Tasman due to bank lending restrictions and The Australian reported how the Reserve Bank of Australia had substantially understated the exposure of Australian banks to the dangers of apartment oversupply. The unit glut there was worse than reported, it said.

The Reserve Bank of Australian had warned that the massive number of new apartment blocks approaching completion could send some developers broke and leave the banks nursing big losses, The Australian reported this month.

"The bank estimates that ­almost 40,000 inner-city apartments will be completed over the next two years in Melbourne, Brisbane and Sydney, and says there is a danger that buyers will default because of falling ­prices and the difficulty of obtaining ­finance," the newspaper reported.

"These risks appear greatest in inner-city Brisbane and Melbourne, where the new supply is largest relative to the existing dwelling stock," the Reserve Bank said in its latest review of the ­stability of the Australian financial system.

The focus went on Auckland apartments this month after the cancellation of the 91-unit Flo project in Avondale where the developer blamed lack of bank lending and construction prices which rose 20 per cent in the year between when he planned and started to build.

City Sales provided details of sales and places being passed in at auction. Recent activity gives some indication of what vendors are getting.

A unit in Forte at 37 Symonds St near Auckland University sold at auction late last month for $268,000. That place is small, at only about 27sq m and has one bedroom, one bathroom, a deck but no car park, City Sales says.

A unit in Memphis at 11 Charlotte St in Eden Terrace sold at auction last month for $638,000. That place has two bedrooms, two bathrooms, two car parks, a deck and is about 62sq m.

An 80sq m unit in Newton Rise at 121 Newton Rd, Eden Terrace, was sold at auction last month for $636,000. It has two bedrooms, one bathroom, a car park and a deck, City Sales says.

Two places have been passed in at auctions this month.

A 33sq m one-bedroom one-bathroom unit on level five of Sapphire at 74-76 Wakefield St in the CBd failed to sell under the hammer. That place had no car park and no deck, the agency said.

A two-bedroom 1-bathroom place of about 49sq m at City Zone, 11 Liverpool St in the CBD was also passed in at the auction this month, the agency said.

Last month, City Sales managing director Martin Dunn revealed how people who bought apartments off the plans in two big new blocks were re-selling without moving in and making up to $100,000 after just two or three years. The re-sales were in the new Urba on Howe St built by Conrad Properties and the new Sugartree between Union St and Nelson St.

Read: Auckland apartment buyers making $100K killing

Zoltan Moricz, CBRE research head and senior director, said most new Auckland apartment schemes were proceeding as planned, bringing thousands of new units to the city.

Read: plans for nearly 2000 apartments ditched

About 600 new Auckland apartments were built in 2014, rising to more than 1000 last year, his research showed.

If all projects being marketed and now rising were completed, just under 2500 new units could be finished this year, he predicted in June.

Next year, nearly 4000 units were planned, under construction or being marketed, but this drops to 2500 by 2018, Moricz said.

- NZ Herald

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