Buyers back in apartment hunt

Mike Macdonald is happy with his choice. Photo / Janna Dixon

Buyers have renewed the love affair with easy, convenient apartment living - everywhere but Auckland.

Auckland apartment prices are falling, while they rise in other parts of the country. On the North Shore, luxury units in Takapuna's Sentinel tower are slashed to half-price to sell.

Developer Rick Martin has been selling two-bedroom apartments for $499,000 - originally on the market for around $1 million.

Three-bedroom apartments were selling for under $1.4m, when three years ago they fetched "north of $2m". The bargain prices had, at least, paid dividends in sales. He said 104 of the 117 apartments had now sold.

Martin reckoned there had been a shift from investor buyers to owner-occupiers who want to be in the sought-after beach locations and who believe the economy is correcting.

Only 33 of the 149 luxury apartments above the central Auckland Stamford Plaza hotel have sold. Colliers agent Howard Sidnam's asking prices range from $488,000 to more than $1m.

But he said the apartments were at the premium end of the market, which was a smaller market, so took a little longer to sell.

According to Crockers' latest market research, Auckland apartment prices have fallen in the past year from a median price of $300,000 to $265,000. And because Auckland dominates the country's apartment market with the most stock, this drags down the national figures.

But these national figures are misleading. Crockers notes that apartment markets in other areas of the country are "relatively healthy" including a burgeoning apartment market in Dunedin.

This could be due to apartments outside Auckland being generally of a higher quality, and fewer being available.

Ray White agent Dominic Worthington, who specialises in selling Auckland apartments, argued that the city's apartment prices had not "tanked", but were now more appropriately-priced.

Back in early 2000, he said, some developers sold apartments off the plans for "false prices" and "speculative returns" to mum and dad investors hoping to cash in on the rising overseas student population needing rentals.

But when numbers dived a few years ago, many investors had to sell at a loss.

Worthington believes that underpricing will become a thing of the past, with higher council levies on new apartments, and stricter rules against building shoebox-sized apartments.

Easy city pickings

Plummeting Auckland apartment prices have been a bonus for veterinarian Mike Macdonald and his wife Michele.

They bought a two-bedroom apartment at the Volt in central Auckland last month for $180,000 - $90,000 less than the last owner paid for it two years ago and under its CV of $215,000.

The Volt is a 417-unit development with a gym, pool and sauna.

Mike said they bought the apartment as an investment and saw it as more affordable than a rental home on the North Shore.

The couple rent out the apartment to a young couple for $330 weekly, which covers the mortgage.

He says there is never certainty in real estate but he feels he has taken a good punt.

"In five years I will be able to tell you if it was a good buy," he says.