The average asking price for an Auckland apartment has risen fast as homeowners look for alternatives to pricey stand-alone homes.
Trade Me yesterday released its average asking prices for property in Auckland and the price of apartments on the site had climbed by 49 per cent in the past 12 months.
"It's a massive amount of money for an apartment but that's the grim reality of the demand from buyers in the Auckland market now," head of property Nigel Jeffries said.
Bayleys Real Estate agent Trent Quinton said he had noticed more retirees snapping up apartments, such as in the new Hopetoun and Hereford developments in Freemans Bay.
Andrew Murray, of Apartment Specialists, said the figures were likely skewed by those new, more expensive developments. "If you look on the fringes in Auckland there aren't that many apartments outside the CBD," Mr Murray said.
"The majority of the apartments have always been in the CBD and all of a sudden all of these developments in Mt Eden and Ponsonby all started coming out because housing prices have shot up and made it more viable for a developer to sell ... there's no way your standard market has gone up 49 per cent, no way. Okay, 30 per cent, but 49, no way."
Mr Murray said the "off the plan" developments shouldn't be treated the same as the pricing of existing apartments.
But Mr Quinton said the CBD had been undervalued for a "fair amount of time".
"And I think anything in the city or the city fringe is a realistic option for people to live in rather than the quarter acre in Mt Eden. People are making the move to the city, but it seems to be the older generation that are leading the charge which is quite, not unusual, but a big change for a lot of people."
Mr Quinton said the baby boomers had the money to do it as they'd likely had their property for at least 20 years and made a healthy profit when recently selling.
"It could be a bit of supply and demand but realistically just more lifestyle changes for that baby boomer generation. They're looking at travelling more and they're mainly retired and they want something that's secure and safe and that they can sort of switch the lights off and give the keys to the building manager. That's the easier lifestyle that generation are looking at."
A few first-home buyers had also snapped up apartments, he said.
Colleen Milne, chief executive of the Real Estate Institute of New Zealand, agreed there had been a "big bump" in interest in apartments with the median price increasing from $361,500 in August last year to $435,000 last month.
The median price for a two-bedroom apartment had risen by $80,000 to $485,000 in the 12 months to August, while the median for two-bedroom residences had also increased.
"The median price for two-bedroom residences for August this year is $550,000 so there is only a $65,000 difference in the price people are prepared to pay for a residence versus an apartment," she said. "Compared to the figures of August last year the gap has closed by around $5000, which proves that the two-bedroom apartment market is keeping pace with residences and a little bit more."
Lifestyle change for couple not taken lightly
Auckland couple Craig and Cheryl Thompson put plenty of thought into where they wanted to live for their retirement years.
"A bit of it was probably age driven. I will be 70 next year by the time the apartments are ready, and my wife will be 68. So it was really just driven by age and seemed to be an opportunity to have an easier lifestyle and have more freedom to do other things."
The couple have opted for a three-bedroom apartment in the Hereford building which is due for completion in October next year.
"We didn't make this decision impulsively, it was quite rational over a period of time. We couldn't really find anything and then this one came up and it was a really nice apartment complex as a whole for our age group."
However, as the couple were used to being on the go and doing their own maintenance, Mr Thompson said they would have to wait and see how they adjusted to the new city lifestyle before getting completely settled.
"We have been doing up old villas and houses over all these years and we've never had anything new so it's an opportunity to move on. It's a change of lifestyle but at the same time we don't know how we'll get on. It's a gamble because we've always had the garden and that sort of thing."