KEY POINTS:
A report predicting grim times for Auckland's apartment market has sparked debate about how far property values will fall.
Ian Mitchell, an apartment expert with real estate consultants DTZ, questioned whether values would plummet much further after some big price drops this time.
Price cycles were a natural
part of the property market, he said, but he challenged the assumption that they would continue to drop for the next two years.
"I think values have fallen quite a lot and already taken a large hit. Are there further drops to come? I'm not sure about that," he said.
He was responding to the report by Hybrid analyst Kieran Trass who found some units had lost about 40 per cent of their value and predicted values and rents could fall much further by 2009.
The market was dangerous for investors, with thousands of central business district apartments vacant and more than 1200 for sale at a total asking price of $450 million, Trass said.
"The CBD apartment market has been fried to a crisp by over-zealous property developers and the Auckland City Council's hunger for more rates. To top it off, many apartment buyers were lured into buying over-valued apartments by slick and high-pressure marketing under the guise of buying a bargain and false promises of making easy money," Trass said.
The city had 17,000 units and thousands were vacant, Trass said.
Damian Piggin, an apartment specialist with agency Ray White, said apartment values were not falling throughout the city.
Prices were rising in many areas, including the exclusive waterfront-zone units and in the owner/occupier segment, he said. He cited units in Highgate, which had been selling for about $350,000 last year but were now fetching $550,000, and The Statesman as blocks where units were fetching good prices.
Tenant demand for units was outstripping rental unit supply, he said.
"Most of our staff are struggling to find units to tenant," Piggin said.
Martin Dunn of City Sales said he also took the opposite view to Trass, prices were rising in many areas and he also cited The Statesman as an example.
"His conclusions are completely wrong. He conveniently confuses the two markets: the off-plan market - where people bought at inflated prices and where these prices are now falling - and the secondary or existing market where prices are rising steadily," Dunn said, adding that the city had 24,000 units, not 17,000.
"First home buyers also finally entered the apartment market this year which has kept sales at quite robust levels."