Apartment values shoot up
Sometimes residential property investment in New Zealand can seem like a three-ringed circus with all the juggling that goes on. You're weighing up the location, the tenants – not to mention the type of rental! Do you want a freestanding home or an apartment? A four-bedroom in the suburbs or a compact little townhouse? It can actually have a big impact on the type of renter you attract, as well as long-term gains.
But for anyone dipping their toe into residential property investment in Auckland, things are looking up – literally! Freestanding houses have long been the flavour of the day for investors, but apartments are taking centre stage at the moment. Apartment and unit prices in the City of Sails have been expanding at a rate of knots recently, according to TradeMe Property's Sale Price Index. It could be a great time to get in on the action before the ship leaves port!
Let's see: Over the past year, the average asking price for an apartment has jumped $114,050, according to TradeMe, and now sits at around $504,500. Not one to be left in the dust, unit prices have leapt up, too. They clawed over the $500,000 mark in May – in fact, their prices have almost than doubled on five years ago. When you take these figures into account, it's getting pretty hard to pick a dark spot on Auckland's property all.
For first time investors, apartments or units could be a really great option to get started in the market. They're a lot more affordable when compared to a detached property in Auckland. Think about it this way: TradeMe research puts the average asking price at $747,450 for a house – that's $200,000 more!
Up, up and away
In fact, many people actually think apartment living could be the way to go. RBNZ Governor Graeme Wheeler made a few interesting comments earlier in the year at a Finance and Expenditure Select Committee about getting rid of height restrictions on inner-city buildings, if only to take some pressure off.
He pointed out that Auckland needs about 10,000 houses a year over the next 30 years to keep up with demand, so building upwards could actually be one answer to the supply-side question.
"I think work needs to be done in inner Auckland in addressing the height restrictions and the "not in my backyard" syndrome that's there," he said at the time.
It'll be fascinating to see whether Aucklanders end up flocking to these compact homes, especially since prices for bigger houses are rising so high. It's worth thinking about a unit, townhouses or apartment for your own portfolio, as well – just be sure to get property advice to make sure it's right for your investment strategy!
Here's to your financial independence!
Authorised Financial Adviser / Investment Property Expert
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