Buyers can have more confidence in the Auckland apartment market, the findings of a new report suggest.
While three apartment developments were abandoned in the first half of the year, 36 new projects were launched across Auckland, according Colliers International's six-month report card on the residential property market.
By the end of 2019, 34 apartment projects (2245 apartment units) in Auckland are estimated to be completed, and 3,340 apartment units are expected to be completed in 2020.
Chris Dibble, director of Research and Communications at Colliers International, says: “It’s really the experienced guys now who are looking at getting things moving and going ahead."
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That means buyers can have more confidence, he says.
“I think they should, especially off the plan stuff because it’s a better product that’s being delivered in the market at the moment.”
A number of factors were driving that. “It’s because there’s so much more scrutiny on the market from everyone – from the banks, from the purchasers, from the developers," Dibble says.
“Everyone who is involved is a lot more cognizant of what’s happening in the market and they really want to make sure that it’s right and that at the end of the day everyone’s happy.”
Dibble says the market in Auckland has not overheated, unlike in Sydney where there has been an oversupply of apartments.
“When you see there have been 36 new projects announced (for Auckland) I think there is probably still demand for apartments. I think we’ve just got to get that right balance now between where they are in the right location.”
About 60 per cent of the apartment supply has been in the CBD, he says, but the report highlights there is a growing apartment profile outside the CBD into the city fringe and suburbs due to population growth and connectivity with transport.
Dibble also says while fortunes have swung towards the buyer in some regions of New Zealand, that hasn’t been the case in places like Dunedin, Hawke’s Bay and Rotorua which are experiencing an uplift in their house prices.
“Auckland, Christchurch and perhaps Queenstown are the ones that are recalibrating from where they’ve been in the past,” he says.
Investors and others who bought properties over five years ago when the market was hot should be “content” with the price gains they made, he says.
“I think there are lots of positives in the market. We’re just taking a breather, refreshing our perspectives, and there’s nothing really that’s upset our market at the moment which is a positive.”
Another area the report highlights is the growing build-to-rent market, where buildings are designed for rental instead of for sale.
Build-to-rent buildings are more common in America and the United Kingdom. Dibble says that while that sector has been quiet here so far, he has no doubt this market will take off in coming years.
“As our residential sector evolves and becomes deeper and broader and we have more variety, there is probably a lot more room for the build-to-rent market. While there isn’t quite the right balance at the moment between landlords ability over rental tenure and what can be done in that space, I think build-to-rent does provide a certain option for people that want to rent, who don’t want to own, but who are looking for a more professionally managed rental environment.”
There are around four or five build-to-rent buildings in Auckland at various stages and Colliers is monitoring a further 11 projects. But, Dibble says the concept is still in its infancy here.
He believes for this market to be really successful a change to GST is necessary because another 15 per cent being put on developers was too hard for many.
“What we’ve seen in Australia and the UK and the US is that there have been changes to the law on that perspective.
“It will happen. We’re just again in a different phase and I think it’s exciting for the New Zealand market where we’re going to be heading in the next few years and as opportunities arise.”
