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Activity Elevates in the Auckland Apartment Market

By Sammie Johnson

Momentum hit the Auckland apartment market in January with a high level of new listings coming to the market, and plenty of buyer competition driving one of our strongest January’s yet.This activity was evidenced with our City Apartments business proudly sitting as #2 Office in the group nationwide.

Our auction numbers continue to grow, along with pre-auction offers coming in thick and fast across the residential and apartment market as some buyers look to get a competitive advantage over their competition.

Early signs show that as the residential housing market continues to grow and returns diminish, investors across the country are trending towards apartments as a more financially rewarding investment.

This heightened activity is being driven predominantly by an increasingly stronger rental market and net returns which we are seeing as high 14%, giving significant cash flow advantages over most other investment opportunities.

Owner occupier interest is very active also, with affordability driving a strong first home buyer market and new high-rise developments in waterfront hotspots such as Wynyard Quarter continuing to provide quality options for downsizers and empty nesters.

The Auckland Apartment Market is certainly alive and active with a lot going on. If you’d like to have a chat and find out more, get in touch with one of Ray White City Apartment experts.

What are you waiting for?

Why is there buyer confidence at the moment? – Carey Smith Ray White NZ CEO 

There are many reasons for the current buyer demand. The most significant of these reasons relate to finance. Interest rates are playing an even more powerful role in determining house prices than previously anticipated. When interest rates eventually do rise, the forces that have driven New Zealand house prices even higher over the past decade may go into reverse; however this is not anticipated any time soon.

With interest rates at all time lows and with banks being supportive of buyers, we are seeing many wanting to take advantage of these factors. Obtaining secure credit on excellent terms while it is available, is certainly influencing demand. 

This is not only the case with first home buyers, but across all sectors of the market which have also been helped by the easing of LVR restrictions for the short-term. 

In December, the ANZ Bank, the nation’s largest lender, mandated that residential property investors would need a 40 per cent deposit to get a home loan. Whilst in January Westpac announced a mortgage rate of 2.29 per cent which has been matched by three of the other major banks.

Fortunately, we continue to see confidence in buyers with job security, working in industries not materially impacted by the current economic environment, with investors and first home buyers making up 50 per cent of active purchasers in the market. 

If there are future risks in the market, why should buyers enter  the market now?

For most people, it is only apparent that a market has hit the bottom when it starts going back up again. Buyers trying to ‘game the system’ and wait to pick the bottom could find themselves in a situation where a new set of market conditions apply. As a market starts to increase in value, listings become scarcer, buyer competition increases, interest rates have traditionally increased and purchasers run the very real risk of not securing their family home. 

Longer-term, there seems to be broad agreement that New Zealand’s fundamentals will remain strong. Property investment has, and will always be, a long term investment and if finance continues to be provided on the current terms, and we have no reason to see why not, the purchasing power of buyers is expected to remain strong and be the main driver of buyer confidence.

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