Market Report 2021 June 30

Capital Gain: Houses vs Apartments which is better long term.

Market Update

Capital Gain: Houses vs Apartments which is better long term.

Market Update - June 2021

June 2021

This month my market update is a gripe. I am over New Zealand's love of / bias towards houses.
Houses are better investments. Houses go up more than apartments long-term. I hear it everywhere.

Market Report 2021 June 30

This month my market update is a gripe. I am over New Zealand's love of / bias towards houses. Houses are better investments. Houses go up more than apartments long-term. I hear it everywhere I go, friends, buyers, dinner parties and even the banks. Just read this article a buyer sent me. Westpac - Apartments vs Houses 

Price increase for 2 bedroom properties 2001-2021

Apartments have a bad rap they don't deserve.

In the last 30 years, houses have outperformed apartments by a large margin and this is where those who attest apartments draw examples from. History. Well done. Clap clap. But the past doesn't always direct the future... I expect a few gasps... but hear me out. Pre 2012 this history is completely irrelevant and needs to be forgotten. 

1990 - 2011 created an unfair reputation. Values barely went up over this whole period. Nearly all owners who bought new and sold in this period LOST money and on top of this was the period where everything built had a risk of leaking. 

That's a lot of negative experiences out there (about 26,500!) and the reason apartments have a performance stigma they don't deserve.

Why?

Apartments weren't a viable solution in mass for Aucklanders prior to 2012 due to the average Auckland house price being under $500,000. Simply put, why buy an apartment if you can buy a house?

Apartments are a solution to the scarcity of land and increasing population. I don't believe we were there pre-2012. Most New Zealanders looking to buy Central (not baby boomers and me) would not buy an apartment if a stunning villa with a private backyard was in reach.

After 2012 the average Auckland house price went past $500,000, Central houses $1,000,000 and masses of people started getting priced out. Welcome to day one for Apartments. 

So, what is an apartment's performance vs that of a house? What should its reputation be? 

Between 2012 and 2017 

Apartments actually outperformed houses. Yes, apartments more than doubled in value in 5 years. 

2017 to mid-2020

Both behaved the same.

Mid 2020 to today 

Houses jumped ahead 15%. Reason - Apartment growth hindered due to COVID resulting in bank deposit restrictions. (All temporary) 

Anyway, there is more detail here to delve into... i.e., Oversupply risks, Debt to Income Ratios favouring apartments, etc. But my point is: Apartments are now comparable assets to houses when it comes to capital gain and it is my belief we will be winners in periods where the cookie crumbles the right way. 

So next time you hear the apartment market getting bashed... do me a favour and put them in their place. 

Next month I am going to meet some bankers to test a few models. Debt to Income ratios could be a great thing for us Apartment enthusiasts!! More later.

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.

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      Capital Gain: Houses vs Apartments which is better long term.