Market Report 2020 December 18

Market Report 2020 December

Market Update

Apartment Market Prediction 2021

Market Update - December 2020

December 2020

The tortoise and the hare is how I would describe the apartment market last year. The housing market sprinting off into the distance and the apartment market slowly plodding along.... the question is like the fable will apartments catch up?

Market Report 2020 December 18

The tortoise and the hare is how I would describe the apartment market last year. The housing market sprinting off into the distance and the apartment market slowly plodding along.... the question is like the fable will apartments catch up? 

100%. Value is all about comparison and with our housing market looking to sit $100-150,000 higher by the end of 2021 at some point apartments will follow. So, when?... When finance is even. 

Right now, a first home buyer requires a 10% deposit for a house but 20% deposit for an apartment But if it goes how I think it will the Reserve Bank on March the 1st will put both assets at 20% and the catch up will begin. 

And so...

The Auckland Apartment market prediction for 2021. 

FRINGE Owner Occupier apartments - (One and two bedrooms that meet Bank Criteria for first home buyers up to 80m2)  

This market was the performer in 2020 and it will continue. I see values increasing by 10% from pre-COVID levels. The fringe suburbs are always popular, and this is where the increased housing market will have the most effect. 

Fringe house values have gone up sharply leaving many who wanted to live suburb central now without a choice... they can only buy apartments. 

A tip: Makes sure your apartment is well presented. These buyers are 100% emotional

High End Apartments - $800,000 plus, 80m2 and above.

Will finally get some movement after moving sideways since 2017. Brand new high-end apartments are now $4,000 to $5000 more per m2 than already built which is starting to put real pressure on prices*.

The buyer demographic is also becoming clearer enabling marketing campaigns to be more successful. The upper-end apartments led by baby boomers, the middle, high-flying executives who need to be central for work, and the lower end, first home buyers being priced out of the central housing market.

And yes there is always an asterisk. We are seeing a gap appearing between complexes that are being looked after, have done or have plans to redesign dated common areas so it is vital that if you feel this is not happening in your complex to bring it up at your next AGM. (We can help in this area if you need)

My pick is 6% upwards. Nice

CBD Owner Occupier apartments - (One and two bedrooms that meet Bank Criteria for first home buyers up to 80m2)

We need the people back for prices to rise again which is happening. Most businesses are looking at 2021 as the return to the office so employees will be returning in great numbers. (130,000 jobs are in the CBD!) This combined with major infrastructure work like the Wharf and Quay St being completed in the coming months and the America's cup our CBD will be vibrant again.

By the end of this year, I see our CBD back to about 80% with 100% and beyond not occurring till 2022 as a huge amount of activity is reliant on tourism and the international student market.

Values will rise from Quarter 2 through to the end of the year of about 5% with previous values not being surpassed till 2022.

Rental Market and Investor Apartments - Smaller rentals

The under 40m2 apartment market was the hardest hit property market in New Zealand and will, unfortunately, take at least 2 years to recover due to the reliance on international students and short-term tourist accommodation. 

However, rising house prices diminish returns and attractiveness to investors making high yielding apartments more appealing and so we will get a small lift. 

I see the slide stopping with values holding and then rising towards the end of the year. $10 to $15k or 2.5% from current subdued levels. 

Character Apartments - Apartments that reside in buildings built before 1960

The gems of the apartment market. Units renovated to accentuate that character appeal will achieve peak values and beyond. The exception will be character apartments under 40m2 which make up 30% of all stock. This is due to Bank restrictions on size. Banks will only lend 50% on apartments under 40m2, meaning values will be more reliant on the numbers.

So, under 40m2 will hold values with a small lift and larger well-presented will increase by 6-7%

Hotel Lease / Leasehold / Remediation and the unusual 

These three apartment categories are all so specific and unfortunately impossible to predict as a group. Please email me for specifics buildings and I can let you know. 

The Auction Room

The best prices are being achieved by emotional home buyers and first-time investors. Both which are new to Apartments, the body corporate system and apartment finance so nervous and less likely to unconditionally bid.

They are avoiding the auction room and preferring to purchase with conditions through negotiation.

So, I predict the most successful sales method to achieve high prices will still be Listing with price or negotiation. Towards the end of the year, tender may also be worth considering.  

Overall, it is a year of positive recovery and increasing values from quarter 2 and I can’t wait.

And as always….

Whats My Apartment Worth?

Now each apartment has a different value. To find out the approximate new value just email Andrew for a figure of what it's really worth in today's market.

Now don’t worry about access or disturbing your tenant we know the building inside and out as well as having all the floor plans.

So just send them an email and best of all it’s FREE.

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Market Report 2020 December