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Buying an apartment can be cheaper than renting in Auckland's hot property market, new figures show."There's a perception in the Auckland marketplace that first home buyers have been locked out," Pete Evans, Collier's national director of residential project marketing, said.
"In actual fact, figures show that buying a new apartment – which are still in an affordable price bracket for many – may be more cost effective than renting one."
Evans gave the example of two-bedroom apartments under construction in Avondale's Flo apartments, which were selling for between $495,000 to $750,000.
The apartments, between 71 and 78 square metres in size, would probably bring in rent of between $520 and $600 a week.
By contrast, mortgage repayments on a $570,000 apartment could be at $578 a week, based on a 30-year mortgage at the current interest rate of 4.19 per cent and a 10 per cent deposit.
Evans said the figures made a strong case for buying over renting, particularly with off-the-plan apartments.
Buyers of new apartments were only forced to front up with a 10 per cent deposit, compared to a 20 per cent deposit for existing apartments or up to 50 per cent where apartments under 50sqm, he said.
Bruce Patten, of Auckland-based mortgage brokerage Loan Market, agreed buying an apartment might be similar to paying rent but only if the stars aligned.
Firstly, he said, body corporate fees would probably add another $150 a week.
"The second part of it is that you probably won't get 4.19 per cent if you borrow 90 per cent."
Low-equity borrowers would probably end up with a 5 per cent interest rate, raising the mortgage repayments to around $630.
"And then, is there a lender out there that will do 90 per cent? Absolutely there is, but not all [banks]."
There was also the possibility that apartments under $550,000 would qualify for a First Home Buyers grant.
Patten said he did not see a lot of first-home buyers opting for apartments but he thought that was unfortunate.
"At the moment, apartments are generally not considered as an option by first-home buyers, partly because the banks have been restricted in what they'll lend them, but mostly because they've got this fixation with owning a bit of land instead of a bit of space.
"That's going to have to change because apartments are going to be the first-home buyers purchase of the future."
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