First-home buyers: a city-centre apartment or a house in the outer suburbs? Even the experts disagree!

First-home buyers often have limited budgets.

 

With Auckland house prices remaining high, is an inner-city apartment or a standalone house in the outer suburbs the better choice?

 

The answer is that each has its advantages and disadvantages, and property experts cannot agree either. One economist also says that many young people cannot afford either a city-centre apartment or a house in the outer suburbs!

 

CoreLogic figures show that first-home buyers purchased nearly half the homes sold in Glen Eden, Māngere and Papakura in 2019. Average house prices in these areas were NZ$656,000, NZ$690,700 and NZ$611,200 respectively.

 

Property economist Kelvin Davidson says people have their own reasons and preferences when choosing where to live, but he expects suburbs such as Pukekohe, Mt Roskill, Glenfield and Te Atatū South to become increasingly popular with first-home buyers.

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These areas have good transport connections, more affordable house prices and a range of property types to choose from.

 

Real Estate Institute of New Zealand (REINZ) chief executive Bindi Norwell sees the most promise in Auckland’s city centre, Newmarket and Grafton, as these areas have plenty of apartments and are close to parks, public transport and cafés.

 

REINZ chief executive Bindi Norwell

 

REINZ figures show that in the 1 year to May 2019, median house prices in Auckland’s city centre and Newmarket fell by 6.1% and 18.5% to NZ$432,000 and NZ$640,000 respectively.

 

Norwell says Eden Terrace and Favona are also attractive, as they are less than 10 kilometres from the city centre and have median house prices below NZ$700,000.

 

Trade Me’s head of property, Nigel Jeffries

 

Trade Me’s head of property, Nigel Jeffries, predicts that house prices in Newmarket and New Windsor will “rebound” following recent declines.

 

“We expect consumer demand to be a key driver of future property price growth. Areas currently seeing a surge in demand include New Windsor, Grafton and Onehunga.”

 

Economist Shamubeel Eaqub

 

However, Sense Partners economist Shamubeel Eaqub believes there is no single answer to where young people should buy a home. He says first-home buyers are willing to buy smaller homes, apartments and properties in outlying suburbs mainly because house prices are so high.

 

“The biggest problem for young buyers is that they do not have enough for a deposit because house prices are too high. The broader issue is that housing unaffordability will take a long time to resolve.”