An apartment in Auckland's CBD which increased in price by 63% over the last two years indicates the growing interest in better quality apartments suitable for owner-occupiers.
According to QV.co.nz, the 54 square metre, one bedroom apartment in the Shortlands building at the top of Shortland St in the CBD was purchased for $242,000 in 2012, sold for $315,000 in June this year and sold today at Ray White City Apartments' weekly lunchtime auction for $395,000.
That was a 25% increase in four months and a 63% increase in two years.
The quality of the apartment, its relative spaciousness compared to many inner city apartments, and location opposite the park at the top of Emily Place would all have added to its appeal to owner-occupiers.
Recent sales suggest growing demand for such apartments, which reflects the huge lift in suburban house prices in Auckland over the last few years.
Unfortunately Auckland does not have many CBD apartment buildings suitable for owner -occupiers because the vast majority of apartments built during the last boom were so-called shoe boxes, tiny apartments purchased by investors, often to rent out to students.
However the supply of apartments suitable for owner-occupiers could increase significantly over the next few years as a wave of new office buildings are constructed at the harbour side end of the CBD.
These are likely to draw their commercial tenants out of older office buildings further back in the CBD and the higher prices being achieved for better quality apartments means converting the older office buildings into apartments becomes a more viable option for their owners and developers.
At the same Ray White auction there was a mix of owner-occupied and more traditional investment fare up for grabs and a couple of leasehold units that produced some interesting results.
The full auction results are below:
411/72 Nelson St. The Zest building. A 21sq m one bedroom unit, sold furnished. Sold for $150,000. It was rented at $280 a week which provided a gross yield of 9.8%. Rates were $733 and the body corporate levy $1726. According to QV.co.nz the apartment was purchased for $103,250 in 2007 and resold for $190,000 in 2008.
7c/97 Shortland St. Shortlands building. A 54sq m, one bedroom unit sold with vacant possession but with potential rent appraised at $460 to $480 a week if offered furnished. Sold for $395,000. Rates $1104, body corporate levy $3220. According to QV.co.nz the property was previously sold for $242,000 in 2012 and $315,000 in June this year.
10 Dovedale Place, Parnell. A 102sq m, three level unit that was part of a large terraced housing development. It had three bedrooms, two bathrooms and a garage. The sale of this property was always going to be a challenge because it was on a leasehold title and the complex had weathertightness issues. Although maintenance plans are in place to fix the problems, a new owner would be required to pay the body corporate $47,560 towards the cost of remediation work. The property was rented for $530 a week and according to QV.co.nz it was purchased for $197,500 in 1999. The opening bid for this unit was $10,000 and several bidders forced that up to $40,000 but when they would go no higher it was passed in. Rates on the unit were $1184 and the body corporate levy and ground rent were $9119.
204/57 Mahuhu Crescent. Hudson Brown building. A 48sq m, one bedroom apartment with car park, rented for $400 a week This property was on a leasehold title but that didn't deter multiple bidders from putting their hands up and it sold under the hammer for $157,000. Rates were $1105 and the body corporate levy was $6184. According to QV.co.nz the property was originally purchased for $406,000 in 2006 and resold for $100,000 in 2011.
2204/74 Albert St. The Barclay building. A 45sq m, one bedroom unit with west facing city and harbour views. Vacant, but potential rent appraised at $450-$480 a week if furnished. Sold under the hammer for $311,000. Rates were $3386 and the body corporate levy $4652. According to QV.co.nz the property was previously sold for $369,000 in 2010.
802/11 Union St. The Harbour Green building. A 21sq m studio rented at $270 a week. There were no bids on this property and it was passed in.
50/24 Norrie Ave, Mt Albert. A 65sq m, two bedroom, upper level unit in a two level suburban complex with pool. The opening bid for this property was $270,000 which the auctioneer trumped with a vendor bid of $320,000, but when no further bids were received it was passed in. It was rented at $380 a week, with rates of $1265 and body corporate levy of $3520.
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8 Comments
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=113…
ok, now let's raise interest rates to punish NZers for allowing foreign property buying ramp up pushing AucklNd prices further up.
I few "but" to your comment:
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Foreign investors (speculators) contribute to house price rising, yes, but they are not the source of the problem. They are simply joining the speculation party. Investing in productive economy is not as profitable as people thought some years ago with the so called BRICS conquering the world (never happened, never will). So all the vast amount of capital that these investors manage comes now to financial markets in places where speculation is encouraged and rewarded.
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Complaining only about an increase of interest rates and the way it hits borrowers it's complaining only about half of the story. It is necessary to increase interest rates abnormally and still dangerously low to encourage growth through PRODUCTIVITY increase. Instead complaining about growing interest rates we should complain about the fact that speculation is not punished. That's why increasing interest rates only hits first-home buyers and productive economy (small businesses finidng more expensive to borrow) and it does not stop speculation. The problem is not interest rates, it's not punishing speculation.
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The apartment prices go up because there is demand. This seems obvious but it's necessary to analyze this demand to understand the "why". There is demand because there is a perception that prices will continue growing. There is this perception because despite an already overpriced market and an increasing house price/income ratio (less affordability), kiwis still and irrationally decide to buy, government encourages buying, legislation encourages buying and borrowing, and banks are happy lending money. How many times I've heard the advice "just buy whatever you can afford to get into the housing ladder." -Ladder- implies continuously growing prices, that's the main lie.
The apartment prices also go up because speculators put them on rent. And the rent increases because it's mainly foreign students who rent them. This is one of the keys of the situation. New Zealand education system (university mainly) is a highly profitable business that targets foreign students that will leave lots of money in NZ paying rents, taxes, study fees, etc. and will demand small overpriced apartments in CBD. And they come to NZ to study not because of the quality of the education system (which is not that great) but because studying in NZ is the backdoor for immmigration. A sweet candy for institutions that get a lot of profit out of it in taxes.
So we agree complaining about house prices. But lets complain about the source of the problem: rewarding speculation, encouraging to participate in an overpriced market and a huge business called "tertiary education".
JL ...this is all part of the "game" ...the "vested interests" have finally realised that Auckland house prices are now out of reach of a vast majority of local buyers and are now realising the "property ponzi party" is over ...and our now trying to pump up the 'last resort' Auckland apartment market, which as you correctly said, many parties lost some considerable amounts.
Now watch all the 'warped' MSM focus on China, relaxing the rules on more money now being able to be taken out of China ...... as I have always said, when the Auckland market gets to the point of just been overseas buyers, thats when they all will run, as they MUST have the 'upper hand' in any deal .......they don't give a stuff about the local economy and housing in general, its just a place to "park their munny" ....
The rents exhorbinant, for city living, plus if you have a car to park, your bertter to sell it and hire one whenever you need it. Aucklands wages are not going up but down.
Few workers will be able to ever afford them, and your not counting exhorbinant body corp fees.
The propety bubble in China is in immient state of collapse, watch all the hot money dry up and the banks forclose on these very expensive shells.
I retire in 14 years, Im taking everything I have to the Phillippines. NZ will bleed us dry to ever enjoy retirement.
For comparison purposes, this is what high end European prefabs are doing, with a few costs per square metre dropped in.
http://www.dezeen.com/2014/10/17/philippe-starck-path-prefabricated-low…
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