Market Report 2019 December
The new market coming to town
Market Update - December 2019
Auckland has never had a decent high-end apartment market, but its coming and it's going to make apartment living more desirable and raise values.... not lower them.
Auckland has never had a decent high-end apartment market, but it's coming and it's going to make apartment living more desirable and raise values.... not lower them.
Over the next 4 years the only new supply I can see coming to the CBD and fringe suburbs is expensive high-end stock.
This is why I reply to reporters 'Yes there is a new supply of apartments coming to the CBD and fringe suburbs. Yes, an increase in supply normally decreases values but we are not going to have a repeat of the mid-2000s where values dropped 30%. It is a different buyer demographic we are dealing with, it's baby boomers and the ultra-rich needing crash pads and actually, I think it's not only going to raise values but stop Aucklanders poo-pooing apartment living. I can't wait.'
You see, people tend to chuck apartments all into one basket. They need to realize it’s not that simple, there are 10 different categories and they all behave differently…. freehold, leasehold, investor, hotel, air bnb, first home buyer, etc
It's like saying... Taco Bell, McDonald's, SPQR and the French Cafe are the same.
So why will more high-end apartments raise values? Because of comparison.
The average price for an already built apartment is around $10,000 per m2....these new apartments are selling for $16,000 to $25,000!! That makes that 70m2, $700,000 apartment $1.4 million at $20,000 per m2.
By comparison, it will create upward pressure.
So, when you next hear people saying there is going to be an oversupply of apartments in the city and fringe suburbs, please correct them for me.
Next month I am going to be looking into how many first home buyers are in the market looking for apartments. We are seeing a lot more than normal and actually have a shortage of apartments suiting first home buyers...the first time in 4 years!!!
And as always.