Published 15 June 2012
A review of the Auckland apartment sector by Bayleys Research shows the market strengthened significantly throughout 2011 and the momentum has been maintained through the opening quarter of 2012.
Bayleys Research manager Gerald Rundle said in his latest Market Beat paper the 340 transactions completed in the March quarter was the highest figure for that quarter since 2007.
In sharp contrast, the Real Estate Institute recorded only 44 sales in January 2011, just 2 above the lowest monthly figure on record since 2001, when the Auckland apartment market was still in its infancy.
In February 2011, the monthly total doubled to 87 and sales since then have exceeded 100/month, with the exception of November, when there were 95.
At the end of the survey period, the 143 sales recorded in March was the highest monthly total since August 2007. In the year to March 2012, 1340 transactions were completed, up 27% on the previous year and up 51% on the March 2010 year.
“While current sales activity remains below the levels regularly witnessed between 2003-07, it must be remembered that during the earlier period apartment construction was running at record levels and, as a result, high volumes of new stock were being brought to the market.
“The recent upturn in sales activity has stabilised prices in the sector following the sharp correction which followed the global financial crisis & New Zealand’s own recession. Median prices across the city had reached a peak of $299,000 in late 2008. However, 2 years later this figure had fallen to $180,000. The latest quarterly figure has seen the median price again pass $200,000, finishing the quarter at $205,000.”
Mr Rundle said much of the attraction of the apartment sector was its price structure, presenting an affordable opportunity to enter the property market either as an owner-occupier or an investor. For investors, he said recent upward pressure on rentals had resulted in high returns being generated.
54% of cbd apartment sales for the year were for less than $200,000 and 29% in a range of $200-350,000, contrasting sharply with inner-suburban house prices – the Mt Eden median in the March quarter was $759,000, Ponsonby $802,500, Parnell $960,000.
“Investors have been drawn to the market as a result of affordability & high returns. An analysis of auction sales over the last year has shown freehold apartments are returning 6% – 8.5% net of rates & opex. Investors are looking for higher returns from leasehold, where returns have regularly been in double digits.”
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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.