The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.
By Gavin Lloyd
Auckland is undeniably moving into the apartment era. Attracted by a new-found style and quality, investors, wealthy downsizers and first-home buyers are all turning to apartments in record numbers.
In August this year, the Quotable Value Quarterly House Price Index showed the average Auckland house value had officially surpassed the one-million-dollar mark, at NZ$1,013,632.
And with the recently passed Auckland Unitary Plan coming into effect, which makes it easier to subdivide properties, we’re going to see an increase in high-density housing.
Given the current climate, Prime Minister John Key is now encouraging young Aucklanders and downsizers to consider apartments.
Record number of off-the-plan apartment sales
Auckland apartments are currently in huge demand, with a record nearly 2,000 apartments having been sold off-the-plan already in 2016.
We’re seeing an increase in higher-quality apartments, at affordable prices, which provide a more cultured and sophisticated standard of living. This change in housing supply is making it easier to forego the traditional backyard lawn for apartment living.
Off-the-plan apartment purchases hold a lot of appeal for Aucklanders because they are exempt from the recent changes to loan-to-value ratio (LVR) mortgage restrictions.
Investors looking to buy an existing home are now required to have 40 per cent equity. However, new builds – like off-the-plan apartments – generally only require a 20 per cent deposit. But for New Zealand residents, a 10 per cent deposit is all that’s needed, with the balance of the purchase price payable on completion*.
* Off-the-plan investment opportunity
By taking advantage of the 10 per cent minimum deposit for off-the-plan apartments, investors are making quick profits and expanding their property portfolios.
For example, if you purchase an apartment off the plan for NZ$800,000, you are required to put down an NZ$80,000 deposit. The development is going to take two years to build, during which time the value of your apartment has increased to NZ$980,000. In this short period, you have made a net profit of NZ$100,000.
Demand outstripping supply
Across greater Auckland, very little of the current new apartment stock is available for purchase, with only 1,400 of the 8,000 upcoming units still for sale.
The number of new projects is declining at a time when the Auckland market is crying out for high-quality apartments at affordable prices.
What we are starting to see though is higher-quality apartments in the pipeline, as the target market shifts from investors to owner-occupiers.
Two stylish Auckland apartment complexes are new to the market and up for sale.
European-style boutique apartments
Library 27 is a great example of the increased quality of inner-city apartments.
Neighbouring the Auckland Art Gallery and Auckland Library at 27 Rutland Street, the complex aims to provide the sophistication and elegance of European design at an affordable price.
Library 27 is the creation of Eaglestone, well-funded Belgian developers with a strong reputation for artistic design principles.
“The attention to detail is what sets Library 27 apart: separate powder rooms, his and hers hand basins, as well as each apartment having its own balcony. The generous high ceilings and ingenious floor plans create a real sense of spaciousness,” says Eaglestone’s New Zealand Director Kim McGregor.
The 49 units available for sale in Library 27 are a mix of one bedroom plus study, and two bedroom-two bathroom apartments, as well as studios and sub-penthouse apartments.
The majority range in price between NZ$545,000 and NZ$880,000. This is very reasonable in today’s market, given the location, design outcomes, and quality finishes.
Library 27 is due for completion in 2019, but apartments can be bought off-the-plan now by visiting the display suite at 2 Kitchener Street in Auckland’s CBD. More information is available at library27.co.nz.
Creating a strong sense of community is one of the aims behind Fabric of Onehunga – a new, residential development in one of Auckland’s oldest urban villages.
A pocket neighbourhood is a planned community based around common grounds. It’s designed to increase social interactions and provide shared green spaces.
“We really wanted to create something different with this project. We’ve worked carefully with our architects and planners to create a true community feeling without compromising on stylish exteriors and interiors,” says Tim Lamont, a director of property developers Lamont & Co.
Situated on a 1.29 hectare site between Spring Street and Victoria Street, the 239 apartments are spread across five four-storey buildings, covering about 45 per cent of the site area. The balance of the site is approximately 7000m2 of open space, comprising shared, common areas and private terrace courtyards.
“Apartment interiors will include contemporary finishes, clever storage, spacious interiors, and maximised natural light. All apartments will flow out to balconies or large, shared terrace gardens,” says Lamont.
The development will be launched in stages, with the first 82 one and two bedroom apartments released earlier this month with prices ranging from NZ$545,000 to NZ$1,050,000. There is a fully furnished two bedroom display apartment at
11 Spring Street, Onehunga.
More information is available at fabricofonehunga.co.nz
Loan-to-value ratio (LVR): A measure of how much a bank will lend against a residential property, compared to the value of that property.