KiwiBuild apartments sell seven times faster than other units: report

NZ Living's KiwiBuild project on Fraser Ave in Northcote was a best seller in Auckland in the second half of last year with 76 sales. Photo / Supplied

Buyers are snapping up KiwiBuild units seven times faster than other flats, leading them to be hailed the "success story" of Auckland's apartment market in a new report.

First-home buyers led the charge to snap up the "affordable" apartments as city house prices surged out of reach for many, real estate agents Colliers International said.

Its latest report found apartment projects offering KiwiBuild units as part of their sales mix sold an average 36 apartments in the last six months of 2019, compared with an average five apartments for projects than didn't sell KiwiBuild units.

A KiwiBuild project in Northcote was also the city's most popular with developer NZ Living selling 76 apartments in the six-month period.

Auckland KiwiBuild apartments came capped at $500,000 for one-bedroom apartments, $600,000 for two bedrooms and $650,000 for three bedrooms. By contrast, the average asking price for Auckland apartments generally was $1.3 million.

"Despite the policy's negative publicity, our data shows that KiwiBuild apartments are now the success story of the Auckland market," Colliers national director of residential projects Pete Evans said.

"Those KiwiBuild sales are as good as any we saw in 2015-2016 when the market was red hot."

NZ Living's KiwiBuild project on Fraser Ave in Northcote was a best seller in Auckland in the second half of last year with 76 sales. Photo / Supplied

The surprise findings come after the Government's KiwiBuild programme earlier fell flat when it failed to get close to its target of building 100,000 affordable homes in 10 years.

KiwiBuild was also dogged by slow sales, leading the Government to announce last September it was resetting the programme.

In contrast to earlier failures, Colliers' Evans said recent KiwiBuild apartment successes were due to their "reasonably good" locations in suburbs, such as Northcote, Glen Eden and Mt Albert.

The Government's promise to buy KiwiBuild homes if developers failed to sell them directly to buyers also gave builders confidence to take a punt on cheaper apartments which often yielded smaller profits, he said.

Evans said this, combined with planning changes encouraging higher-density housing near transport hubs and rising house prices, had created demand for cheaper suburban apartments - a market that didn't exist 10 years earlier.

James Kellow - a director of New Zealand Mortgages & Securities, Auckland's largest non-bank property lender - also gave credit to KiwiBuild for breathing life into the "affordable" market.

Real estate agents Colliers have hailed KiwiBuild units as the success of the Auckland apartment market after proving popular with buyers. Photo / 123rf

"Developers know that - if they want sales - providing affordable, well-located and well-designed smaller stock is where it's at," he said.

Housing Minister Megan Woods said recent successes showed why the Government remained committed to KiwiBuild and its ability to "change people's lives".

But National Party housing spokeswoman Judith Collins said it was "laughable" to suggest KiwiBuild was a success.

"We're three years into a programme that was supposed to deliver 100,000 houses in 10 years and a little more than 400 have actually materialised."

Collins pointed out how just five of the 63 new apartment projects in the Colliers report were selling KiwiBuild units.

"So we're not seeing much evidence of KiwiBuilds taking over the Auckland market," she said.

Auckland's luxury apartment market has slumped as buyers chase affordable apartments in the suburbs, real estate agents Colliers say. Photo / 123rf

In total, 479 apartments sold in Auckland during the second half of last year.

Of these, 308 - or two out of every three apartments sold - were located in the suburbs, up 74 per cent on the first half of the year.

They had an average asking price of $841,000.

A further 79 sold in the central business district and 82 sold in city-fringe suburbs, such as Remuera, Parnell and Ponsonby.

The city fringe apartments had an average $1.6m asking price, but the total number of sales fell 21 per cent from earlier in the year.

Evans said the data showed high-end apartment sales were yet to rebound from the flat housing market and this had left some projects in financial trouble.

"I won't name names, but I could pick on a few in the city that are definitely in trouble."