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Real Estate Investar Blog

Apartments slowly entering first-home buyer psyche

auckland_skyline.jpgThe heat map shows where Auckland first-home buyers have been investing most over the last two years.

The popularity of Ponsonby/Grey Lynn, Epsom, Remuera and Ellerslie showed the suburban dream wasn't for everyone, Myvalocity spokeswman Charlene White said.

"I guess it depends on what sort of lifestyle first home buyers want. There are still a lot of first home buyers who want to live centrally."

Other hotspots include the North Shore's Beach Haven, Glenfield and Albany. The figures could reflect interest from new migrants, who would also come under the first-home buyer category.

Where they are buying

Another heat map, this time of New Zealand, shows first-home buyers spiking in Hamilton, Tauranga, Wellington and Christchurch. Blips were also seen in Taranaki, Palmerston North, Hastings and Dunedin.

Mike Pero of Mike Pero Mortgages said once people started looking outside Auckland, they began to consider whether they could find a job there.

"No doubt people are thinking, well, do we really have to be in Auckland, and what if there was a job opportunity, and most of our work is online.

"If you're a freelance architect or designer or this or that, most people think well, you can live outside of Auckland."

Other data indicates that on a rolling three-month basis, house sales dropped across the country in August as tighter loan-to-value restrictions loomed.

But first-home buyers fell the least, indicating that other buyers might be adopting a "wait and see" position, which would give the new entrants an edge.

Apartments, anyone?

Despite the figures, mortgage brokers and real estate agents spoken to said they were still not seeing young Kiwis looking at apartments en masse.

Pero put it down to space and kids.

"I can understand that first home buyers wouldn't necessarily gravitate towards apartments, being on the 12th floor of an apartment building.

"I just don't think it's in the Kiwi psyche, especially if first home buyers are thinking of a family in the near future, which most of them probably are."

Another reason might be the price. The median sales price paid by first home-buyers for a standalone dwelling in Auckland has hit $790,000, 30 per cent more than two years ago.

Apartments, flats and townhouses were certainly cheaper at $606,000, 27 per cent higher than two years ago, but they were still expensive.

Martin Dunn, of specialist apartment estate agency City Sales, said he didn't see many families, although he thought apartments were still a good option for young couples.

"The only social change that's happening [in apartment sales] is the 50-plus year olds and they're quite fun to deal with. They're the empty nesters.

"But the one group that has stayed away from apartment living is the young family."

Elsewhere in the country, apartments are fewer in number and the price difference with standalone houses was smaller.

Nationally, first-home buyers were spending a median $439,000 on standalone dwellings, while apartments or units cost $413,000.

And Kiwi antipathy towards apartments isn't holding much water with the construction industry. Auckland building consents for apartments now make up 44 per cent of all consents, although that does include townhouses and retirement units.

With so many more apartments and terraced houses being built, Wilson said Kiwi attitudes towards living in closer surrounds was likely to change.

"People are buying later because they have to with regards to whether they can afford it. But in an international context, [apartments] are still viable, people do raise families in apartments."

Arthur Grimes, a former Reserve Bank chairman and now an economist for thinktank Motu, said recently that apartments would become part of Kiwi culture and that New Zealand needed to reduce regulations for high rises.

"You have to lift the restrictions on building them and then the developers will work out what the market wants," he said.

"I can't believe that ... if somebody was allowed to build a high rise apartment in the middle of Kohimarama they wouldn't do so."
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