What first comes to mind when we talk about Auckland's apartment market?

In the past, many people would immediately picture tiny, box-like “pigeonholes” along Auckland CBD streets. That is because most apartments in New Zealand's mainstream market were designed and built as investments. Their value was often judged primarily by the number of bedrooms, with little regard for bedroom size or comfort. Over time, this has been gradually changing.

City Sales apartment agent Scott Dunn says apartments and multi-storey townhouses were once primarily an investor market, with few decent options suited to owner-occupiers. This contributed to the public's aversion to apartment living. But as housing supply has tightened, particularly the supply of affordable homes, attitudes towards living in apartments and multi-storey townhouses have changed dramatically. He says owner-occupier demand has risen noticeably among buyers downsizing and New Zealanders returning home during the pandemic who are accustomed to life in large overseas cities. Government policy support in recent years has also encouraged the development and construction of higher-density housing, including apartments and townhouses, across the city. As a result, Aucklanders now have a more diverse range of apartments to choose from, with more new apartment and townhouse developments in and around the CBD and extending into the suburbs, as far as Manukau in the south and Orewa in the north.

Dunn says studios and one-bedroom apartments no longer dominate the apartment market. Many two- and three-bedroom apartment and townhouse developments designed for owner-occupiers are now the focus of buyer interest. “They are more spacious, better suited even to families, and look more elegant. What's more, with Auckland's median house price now at NZ$1,150,000, a budget below that gives you more options in the townhouse and apartment market. Obtaining a mortgage to buy an apartment is also relatively easier. ANZ recently expanded its lending policy to cover apartments as small as 38 square metres.” So, are Auckland apartments and townhouses still worth buying?

{ad}

In this edition of Lixing's Property Picks, we have once again invited experienced Auckland investor Liang Lixing to provide an in-depth assessment.

Q: In the property market, people tend to buy when prices are rising rather than falling. Given current market conditions, is it still worth investing?

Lixing: The only reason rental yields are low is that house prices have been pushed up. What happens when interest rates rise to 7% or 8%? Will property investors need to raise rents to offset their losses? If they do not, it will be a failed investment. In my view, the days of making capital gains are behind us for now. At this stage, rental returns are the only option left for investors. With new lending policies also making it harder for buyers to obtain loans, would you assume investors have withdrawn from the property market? Although we cannot deny the shift from a seller's market to a buyer's market, some investors remain very active and there are still plenty of investment opportunities. Investors are still buying. Reserve Bank figures show that NZ$1,279,000,000 in loans was advanced to applicants in March 2022, compared with NZ$1,300,000,000 in March 2020. This was down from NZ$2,280,000,000 in March 2021, when loan-to-value ratio restrictions had been removed because of Covid-19.

Q: Which areas of the market should investors be watching now?

Lixing: Investors are still continually looking for opportunities, which may involve apartment and multi-storey townhouse developments. Most try to buy in well-populated areas with good transport links. For those who can afford it, Auckland remains a good option for property investment. New builds will be popular because they are exempt for 20 years from the new tax rules that prevent investors from deducting mortgage interest costs from income to reduce their tax bills. Properties bought with a 20-year exemption from those rules, allowing mortgage interest deductions, will be popular, including apartment and multi-storey townhouse developments near rapid transit routes and urban centres, and properties in other good locations.

Q: Can you give some examples?

Lixing: The first apartment development I recommend is 81 Carlton Gore Road. Formerly known as Fidelity House, it was previously the headquarters of New Zealand insurer Fidelity Life. It is now quietly being transformed into high-quality residential apartments offering an exceptional lifestyle.

Not long ago, renowned, award-winning local builder Lamont & Co decided on a bold transformation of this valuable site: turning it into one of New Zealand's most luxurious apartment developments, named “The Domain Collection”.

The apartment development has two components. One is the conversion of Fidelity's office building, renamed “Park Residences”; the other is a new six-storey building behind it, named “Garden Residences”. The buildings will be cleverly linked by a “secret garden” designed by Philip Smith of renowned landscape design firm O2 Landscapes. Every apartment has a balcony with a view: some overlook Auckland Domain, while others enjoy stunning views of Mt Eden.

Garden Residences Garden Residences

The Domain Collection has 69 apartments ranging from 67 to 421 square metres, with prices expected to start at NZ$1,000,000. The top floor features an ultra-luxurious apartment of more than 400 square metres, expected to sell for over NZ$8,000,000. Alongside its prime park and city views, the penthouse comes with a garage with 3 parking spaces.

The second apartment development I recommend is at 303 Manukau Road, in Epsom, one of Auckland's most sought-after suburbs. Recently launched by experienced developer Lamont & Co, Sympony303 is a boutique development of 43 apartments. It is close to shopping, public transport, universities and Auckland Hospital, with easy motorway access, and is less than 2 kilometres from Westfield Newmarket and Newmarket train station. An entrance to Cornwall Park is directly across the road, making this an excellent location.

The development offers a range of layouts to suit different households. Symphony303 occupies a 1682-square-metre site, with options including one bedroom, one bedroom plus a multipurpose room, two bedrooms or three bedrooms. Interior floor areas range from 43 to 111 square metres, with balconies ranging from 6 to 36 square metres. The freehold development comprises 43 apartments, priced between NZ$675,000 and NZ$2,325,000, with completion expected by the end of 2023.