06 Jul 16
Stuff.co.nz: Auckland city apartment values doubled in past 6 years
The below is a copy of this week's article featured on Stuff.co.nz by Alice Peacock
Auckland city apartment values doubled in past 6 years
Apartments in Auckland's CBD have doubled in price since 2010, driving young buyers out of the market and skewing the ownership towards investors, a property expert says.
Martin Dunn, managing director of real estate agency City Sales, said the price of a square metre in the CBD was now $8000 - or $10,000 for a new building.
Dunn said the last 25 years had seen the number of apartment buildings in central Auckland grow too slowly, from 226 in 1991 to 460 today.
At the same time, the cost of apartments had skyrocketed, "effectively doubling" in just a few years.
"Suddenly, in the last six years, it's gone up to around $8,000 a metre, or $10,000 for new buildings," Dunn said.
"It pushes a lot of first home buyers out of the market."
The average sale price in January 2016 for an inner-city apartment was around $360,000, a substantial jump from the $200,000 average in 2006.
City Sales' quarterly report said five years ago the $360,000 would have secured a premium apartment - but now it likely would only nab buyers an average 1-2 bedroom unit without a car park.
Auckland City Council increased the minimum apartment size from 30sqm to 35sqm in 2007 as a response to a flood of vacant, tiny apartments in central Auckland.
Dunn said the way to let cash-strapped first home buyers into the market was to bring back the "shoebox" apartment.
It was "daunting" for first home buyers to hop onto the first rung of the property ladder, and this frustrated Dunn.
"If they would let us go back to what was reasonable - 20 square metres an apartment - they could solve the housing crisis."
"We could churn out 20 square metre apartments for around $200 grand."
Dunn said Auckland's population was expanding by around 100,000 a year, and increasing the housing supply needed to be accelerated to keep up with this.
"It's no bubble," he said.