By David Hargreaves
I would like to thank ANZ's economists for jogging my memory regarding a piece of work I did a few years ago.
When leafing through ANZ's latest Property Focus publication, which described how the housing market was now bearing similarities with the 2004-06 period, I was reminded of how I drove myself quietly nutty in 2013 trawling back through old Real Estate Institute sales data from the early to mid-2000s.
As I said at the time, the basic intention of this exercise was to demonstrate that Auckland's then (2013) dominance of the house market scene was merely a continuation of a long-running pattern.
But as I also conceded, you should never go into research with preconceptions.
The reality, as ANZ chief economist Cameron Bagrie and team have reiterated, is that in the mid-2000s, Auckland actually trailed the rest of the country in terms of gains.
Hot stuff
All things are relative of course, because the gains to be had in the mid-2000s right around the country were pretty hot stuff. And the fact is Auckland house prices have been higher in dollar terms than the rest of the country for longer than I can remember.
Which brings us back to a key question posed by that ANZ article: Having led gains in the housing market in recent years, will Auckland therefore start to lag the rest of the country again now, at least for a period of time?
The very first thing that needs bearing in mind is that the environment is very different now to the mid-2000s. There were no 'macro-prudential tools' then. Another significant factor that's different is the historically high levels of net immigration that the country, and particularly Auckland, is seeing.
And then there's house building.
Boom and bust
In the 2002-04 period leading up to Auckland's relative 'under-performance' of the housing market, consents were obtained to build 35,600 dwelling units in that three-year period. Looking at the three years (2011-13) just before the start of the migration boom in 2014, only 14,600 new dwelling units were consented.
Remember that the population of Auckland stood at around 1.37 million as at the 2006 census, rising by a less than expected 120,000 to 1.493 million in 2013. Interestingly, however, the population's estimated to have gained another 120,000 (to around 1.614 million) in just the next three years to 2016. And it's continuing to grow gangbusters at the moment.
Auckland went into the mid-2000s on the back of historic high levels of building activity, but it entered the 2010s and the forthcoming migration boom on the back of crashing lows in activity.
So whatever your view of how short of houses Auckland might be at the moment, it has to be conceded that the position MUST have worsened, and considerably, since the mid-2000s.
It's different
Therefore the supply/demand equation is different now to what it was in the mid-2000s.
Left to its own devices then, the Auckland market could reasonably be supposed to continue outperforming the rest of the country - such has been the recent population growth.
But of it is not being left to its own devices. The Reserve Bank has clamped 40% deposit rules on investors. Now, of course that's a nationwide rule. But you can argue that as the houses are that much more costly in Auckland its a dickens of a lot harder to raise a deposit on a house there in general than it might be elsewhere.
Really where this leads us is that Auckland's house prices are likely only going to be constrained as long as the RBNZ's rules continue to have an impact.
Enormous change
I first lived in Auckland in 2006, moved away in 2007 and then didn't live there again till 2013. I didn't think the place changed much in the time I was away. However, I reckon it's changed enormously in the past three-four years in terms of becoming much more of an 'international' city. The feel of the place is very different now to how it was even just three years ago.
And I think as an international city it is going to continue moving away from the rest of the country. It will attract international money - unless Government policy is drastically altered, and it will continue to attract migrants - unless Government policy is drastically altered.
In terms of internal dynamics within New Zealand, a key factor will be the extent to which Auckland wages (in particular) can and will grow. If you took away external capital and migrants coming in, then ultimately Auckland prices might be constrained by simple affordability measures if we don't see meaningful wage rises. And the rest of the country's housing market could get a fillip from people moving out of Auckland (as is happening to some extent) in search of affordable housing.
Moving on
But you know, the world has moved on a lot since the mid-2000s. Auckland is joining up with the rest of the world in a way other parts of the country are not.
And whatever the short term distortions in the house market caused by central bank and Government policies, there will be reasons why Auckland houses/land will simply get more intrinsically valuable. That's what tends to happen with big cities that become 'international'.
The only way that would ever by stopped would be by unleashing an almighty flood of new houses in Auckland. And let's face it that ain't going to happen.
I think the 2017-18 period will be seen as the calm before a renewed storm for the Auckland market.
Yes, history does repeat. But this time. On this issue. Nah. Not for long anyway.
*This article was first published in our email for paying subscribers early on Tuesday morning. See here for more details and how to subscribe.
115 Comments
"Agree - Auckland has come of age. It's now an international city".. Parked my Ace Rental car at Sylvia Park few weeks ago on a nice Saturday afternoon, had lunch and came back an hour later with the side window smashed and little bxstard rummaged through the car and found nothing. Security guard told me that the usual thing with rental car sticker on the back windscreen.
So I couldn't agree more with that statement - just like the Bronx NYC twenty years ago.
Yes if you ignore the quality of immigrant & allow foreign students to gain permanent residency & bring their aging parents I guess you could claim "international welfare city"
So the people of Auckland should be happy with mass immigration at far higher per capita rates per year lately than the UK per capita immigration rate ? That and be happy Auckland cannot even build enough houses either.
Sorry David but seems like a fools idea of paradise
Auckland property remains a pretty good long-term bet for investors - domestic and abroad. Broad advice I guess when the same thing could be said for all property, leaky homes, my leaky car or even the cracked cup I drink from. Today's housing market has morphed into nothing short of a debt fueled stock market. For those who are daunted by events today, stay renting, live within your means. Save and sacrifice like your mortgaged to the hilt like your friends and then buy when things are so dire they can only get better :)
I think the stock market is safer than investing in Auckland houses right now. There is too much risk in bricks and mortar.... Dodgy tenants, rising rates, rising home insurance, rising bank interest rates, deferred maintenance costs, the RBNZ macro-prudential toolbox, election year, political ideology, stagnent wages. I am sure that I haven't included other reasons why buying at today's inflated price is a really bad idea!
Only in NZ have I ever heard that a yachting event was some how relevant to real estate prices!!! The Olympics have been known to have an effect on house prices sure, but some tiny yachting event that most of the world's population couldn't give a solitary s&%$ about? I've never heard it mentioned outside of NZ. I mean presumably it gets a brief mention in some American media, but i've never seen a single reference to it in an American movie (like all their significant sports), or from an actual American in conversation.....In NZ though absolute hysteria and OTT about it compared to everyone else
It is not so much about the event. It is more about what a big event like this does to the labor supply that could be building homes or apartments but are instead building a new waterfront, accelerating CRL, rushing the ICC for APEC, other infrastructure projects to be ready for 2021. There is where the value (unfortunately) will be in a big event in a small country already starved of construction workers.
Along with extremely poor mass transport options, lack of infrastructure (hotels etc). I think a lot of people on here have a very rose tinted view of Auckland being comparable to other international cities they often cite, its NOT a Sydney, Melbourne, London, Seoul etc.
Auckland has spent a decade not building much and resting on its laurels.
In the 2000s Auckland built as much or more than other international cities, clawed its way up to being internationally competitive. But now that Auckland builds less than the Waikato it risks falling back down again.
Auckland is not an international city by any standards. It is just New Zealands largest town with congestion to boot and crap shacks worth half a million dollars in the lowest socio-economic suburbs and even those crap shacks have had deferred maintenance for a couple of decades because their owners were not that well off to start with. Don't hate me for being an ex-aucklander, but I lived and breathed this city for a good decade before realising that this city is being ruined and will turn into just another slum. Poor planning and too many idiots employed within the government and council who are only interested in getting their monthly paycheck.
David please see what Mr MisterB states
He is 100% correct
The standard Nth American of mobile home which is not something on wheels as kiwis would invisage, are built better than what you'll see being built around many Auckland subdivisions. Oh sorry they can't even build enough sub standard homes in Auckland !
I agree. I have been looking into building one just as a project. I have a couple of builders in my family and they are still in their twenties and I think this might be a good project for them. They can take their house anywhere and not be subjected to rates increases, jacked up rents, market forces and bank interest rates. Many of these homes are built using recycled materials for next to nothing and can be legally parked up on mum and dad's driveway or section because they are mobile. They also take up a small carborn footprint. I would love one myself and I am a homeowner without debt.
It's a shithole.
Amazingly poor traffic that is only going to get worse. Immigrant ghettos forming all over the place. Crowded schools, hospitals, gaols, crime and race issues going through the roof. Police turning a blind eye to govt corruption.
What's not to like about the joint?
Some fundamental economics missing in the analysis. - That the price increases have largely been driven by speculation rather than population. If it was totally population the rentals would have increased to the same extent. What we are currently seeing is a realisation that, at the current price level much of Auckland's industry doesn't work. It is most conspicuous with comments on recruiting teachers and police, but imagine how that is affecting a whole pile of manufacturing.
What we have also seen is that small increases in rentals result in different configuration of housing - kids at home longer, more students sharing a flat. Because Auckland's housing stock has more large houses compared to other international cities there is more flexibility when rentals go up.
I also think the foreign investment has also been driven by speculation, and now international commentary is increasingly saying that Auckland is a bubble about to burst we will probably see that slowing down.
So what will happen to Auckland: I don't see the wholesale decline that we have seen in other countries because the supply tends not to swamp demand. But I would suggest that there will be minimal house price increases for a number of years.
And what we are seeing in other cities is prices going up until supply increases, of which Christchurch is the obvious example. It needed to increase until prices exceeded the cost of building new stock and then it settled. Real Estate agents are already saying in Wellington that people will opt for new houses above a certain price point.
Be. Careful ex socialist
Speculation is to be ignored when writing a piece promoting Auckland as a new "International City"
What does David think foreign speculation in Auckland housing exposes Aucklanders to if there's a sudden sell off for any number of reasons by these foreign buyers ?
You play in the big pond you have to expect all sorts of outside forces which could impact Davids bullish paradigm
http://i.imgur.com/sJXV8hk.png
Jul 2017 - 9,986 properties
Feb 2017 - 10325 properties
Aug 2016 - 7023 properties
Feb 2016 - 7449 properties
Aug 2015 - 6362 properties
Feb 2015 - 8259 properties
Aug 2014 - 8424 properties
Feb 2014 - 9993 properties
Aug 2013 - 8817 properties
Feb 2013 - 11206 properties
Aug 2012 - 12190 properties
Feb 2012 - 16177 properties
Aug 2011 - 15011 properties
Feb 2011 - 17546 properties
Feb 2010 - 16961 properties
Jan 2009 - 17684 properties
Nov 2008 - 18900 properties (price trough during GFC $435,700)
Aug 2008 - 18723 properties
Feb 2008 - 11895 properties
Feb 2007 - 6141 properties
Source: https://web.archive.org/web/20160211105859/http://www.trademe.co.nz/pro…
So no sign of panic in the market. A lot of owners may have made money after 2008 by not being able to sell then and so decided to just rent the houses out. I recall discussion in the media how some people were getting caught out with the tax rules. This may have been how the owning a rental mania started.
If you can reasonably comfortably hold onto a property there is no need to sell at a loss. The Auckland property market is sort of self healing. It will just hedgehog until sales improve. Good time to buy a do up as people don't often want to hold onto those. We want to get back to the state of affairs where you can make 50K in a year by using elbow grease and managing a refurb. A lot of people actually expect to make hundreds of thousands by doing absolutely nothing and have been spoiled in the last couple of years because this was achievable.
I agree there's still no panic. The only desperate ones need to dump their property or the bank will do that for them. The mortgages all seem to be 4-17 years since purchase from the data available on trademe (there are some that have obviously been owned for longer but no purchase date data in trademe's system). Banks seem to have avoided running too many mortgagee sales while things have been good (or the owners have managed to sell in a timely manner). None of these mortgagee sales and desperate sellers seem to be disproportionate from what I'd typically expect.
What I'm more concerned about is how much mortgage fraud is concealed, and how many foreign owned properties are struggling to get money out of China (for example) to pay bills such as rates. There may be a number of hidden issues that are yet to surface and may not surface for 2-5 years.
No matter what just hope there isn't a panic.
I have a few friends that have made commitments in property elsewhere in the country and made the mistake of hanging onto their Auckland properties for too long. They are now facing selling at a much reduced price and have pulled their Auckland properties off the market out of fear. They are gambling on price increases over the next few months, rather than try and re-negotiate with their banks regarding their falling equity and rising interest rates. It is a huge concern for them.
David - you could very well be right!
Unfortunately there will always be people who will moan about the way things are, the way things use to be and the way things should be. The landscape has changed and people need to adapt. I'm unsure about what is around the corner, but I certainly don't want to leave things to chance. Some would indicate that NZ is on the verge of catastrophe and that we are headed for 3rd world status, the reality is that by developed world standards it's still a very pleasant and realistic place to live in the world, regardless of what the negative aggressive have to say. Perhaps if things were so bad those individuals would just leave and go somewhere else to prosper. Some immigrants actually do see the value of New Zealand as a way of life compared to the hell holes they have come from, many locals take it for granted and just moan constantly about it.
You have one pie to eat and you are willing to share your slice of the pie with others and that should be commended. However your slice of the pie has become much less because of everyone else who is also fighting for a bigger slice of your pie. So by your definition, allowing more hopeful and very eager immigrants in to eat a slice of your one pie, will not leave you with just a few crumbs? Your pie will only feed a few and you will still be hungry, but perhaps feeling more humane? It is never a good idea to expect New Zealanders to lower their own standards to meet the standards of immigrants from third world countries. It just means you will need to share your spare bedroom and some of your already low wages.
80 days to go. Governments job is to protect the population. Selling taxpayers out to the highest international bidder is an appalling failure of that responsibility.
Lots of options to vote for that correction. Ban foreign ownership (tick), start charging a annual land tax based on stupid sale price to overseas owners (tick), bring in an empty house tax (tick), bring in a Vancouver tax for international flippers (tick), kill off the immigration scam education (tick). bring in massive penalties for lawyers and accountants trying to cover up overseas owners (tick), ring fence tax losses (tick) introduce DTI ratio (tick), bring in a stamp duty tax on domestic flipping (tick).
And that should about do it.
The whole idea that there is now a string of "international cities" that are somehow different is a story that is perpetuated in the Anglosphere. Yes, Auckland is multicultural and you can buy all kinds of food that are unrelated to your upbringing. I think this whole idea of "international cities" is simply a lazy attempt to explain the world from one's suburban claim based on center-periphery theory. Furthermore, considering that the Anglosphere has shaped the monetary system, it makes sense that people want to create an image of its own likeness. To suggest that this attitude is an antidote to bubbles is wrongheaded.
Global cities for Global citizens. It's the international airports putting the cities on the global transport network that is the key element. This is a form of empire. They will be "multi-cultural" but Anglo culture and language will dominate.
This is why I am not totally against it. It is a possible path to world hegemony.
Oswald Spengler predicted that this would come after the decline of the West:
Arguing by detailed analogies with three other civilizations, Spengler predicted that about the year 2000, the strongest Western nation would enter a 200-year period of Caesarism (extraconstitutional omnipotence of the executive branch of the central government) and then create a global empire.
After the year 2200, the global empire will pass through a period of "historyless stiffening and enfeeblement" (Geschichtsloses Erstarren und Ohnmacht), whose duration in the other civilizations was 145–200 years.
I completely reject the premise that Auckland is a "Global City". Auckland is a regional backwater. What would make Auckland a "Global City"? Having an airport with international connections? Big whoop. So people supposedly move to auckland so they can take long distance (and in most cases multi stop) flights to other destinations. That makes no sense. Why not live in London or New York? SF or Melbourne? What does Auckland offer over those places?
What industries does Auckland have? What does it produce other than over priced houses and congestion? Supposedly it has agglomeration benefits but all I see are transaction costs from less efficient infrastructure.
To me Auckland is a cancer. It feeds on the rest of the country, taking their productive resources to grow itself. The bigger it gets, the more it takes in. This makes it seem exceptional, because surely cancer is exceptional in its immortality and refusal to obey the laws of the body. But eventually cancer surpasses the hosts ability to sustain it and the body dies. So to Auckland will kill its host if it's growth isn't arrested. It's either that or incomes start growing in auckland to match their property prices. That would require Auckland to actually be exception in production and not just speculation.
Auckland is listed as a Beta+ Global City in the Wikipedea article on Global cities:
I get that. We dont have industry like London has the Financial centre or world class jobs like Silicon Valley, New York, Frankfurt. We are not close to anywhere to export goods. As a place we are more of a service centre, that services NZ. We dont really have that many natural resources or competitive advantages to grow our wages.
We are a pretty little country where there are no wars, great coast line and until recently low population. We are artificially inflating our GDP by increasing our population, while our quality of life is decreasing.
Interesting article which supports Davids point of view..
I think the original research paper was in 2006... I've had a copy since 2010.
I tend to agree with it , thou it has had its critics.. ( as everything does)
http://www.nber.org/papers/w12355
Roelof there in lies a problem , the paper was released July 2006 , based upon a US market that was about to revert. Although the paper is primarily based upon the fifty years 1950-2000, it came at a time when real estate prices had been on a relentless rise, and any and all reasons were being given as to why this should occur. Similarly other papers by the same authors show a lack of insight in what was just around the corner. Dublin was voted international capital of Europe in 2006, undoubtedly it was claiming to be a super city.
A variety of international financial services,[9] notably in finance, insurance, real estate, banking, accountancy, and marketing
Headquarters of several multinational corporations
The existence of financial headquarters, a stock exchange, and major financial institutions
Domination of the trade and economy of a large surrounding area
Major manufacturing centres with port and container facilities
Considerable decision-making power on a daily basis and at a global level
Centres of new ideas and innovation in business, economics, culture, and politics
Centres of media and communications for global networks
Dominance of the national region with great international significance
High percentage of residents employed in the services sector and information sector
High-quality educational institutions, including renowned universities, international student attendance and research facilities
Multi-functional infrastructure offering some of the best legal, medical, and entertainment facilities in the country
According to the Global City Scale Auckland is indisputably as Beta + city, it's right there on the Wiki page.
We all have our own opinion about Auckland, there are so many cities I prefer to spend time in than Auckland, but that withstanding, the scale Zachary links to calls it a global city. We can't deny that.
If Auckland can pull its finger out, spend like crazy on some amazing infrastructure and encourage more growth in arts, science and tech, given 10-20 years, Auckland would be a city that pretty much anyone would agree was global or international. It has potential or it could horribly turn to shit. That could happen too.
NZ in general needs to get cracking. Government is being infuriatingly short sighted. People's patience is wearing thin, so that instead of a strong, sensible forward planning government we are likely to get fractured, populist movements and a bunch of tom foolery and vote bribery instead of proper national planning.
I want NZ to have fun, exciting global cities so that our kids can all grow up and enjoy their twenties there, instead of automatically thinking than London or Sydney is better.
Poor London though. I can't see it being ranked the No1 Global city for long once Brexit has stripped it of much of its clearing privileges.
I agree with your points gingerninja and things could go wrong if we are foolish. Auckland's Beta+ Global City status is largely a result of a number of factors that have little to do with its present population. Simply being the one major port city on quite a large island in a temperate climate zone has largely been good luck of the draw. We are the major city in a land with strong natural defences and British history and institutions to base things on. Good farming land and other natural resources.Good friends in the UK, US, Australia and Canada. An indigenous population that was not too numerous and that was willing to get actively involved in the city and the modern world. Having this sort of heritage it was hard to go wrong up until now.
Somehere in the references in this dicussion was a note that a true global city floats all boats, the poor are relatively well off.
Thinking about that is the site insidermonkey that lists cities by gdp per capita. There is only one city in australia that makes the list, forget NZ.
http://www.insidermonkey.com/blog/20-richest-cities-in-the-world-by-201…
My bet would be that the current influx to Auckland is lowering its GDP per capita for the city.
Where can I find the stats, lots of them need that mad Realme login.
Wages / Earnings have to justify. World over wherever the property moved very fast like in NZ, their has been a long period where it flattens or falls as income too has to justify and the only way the government can sustain is by overseas buyer - nothing can beat money laundering and national is government is all for it and the only thing that has and is stopping them is election.
I do not agree with this analysis.
And whatever the short term distortions in the house market caused by central bank and Government policies, there will be reasons why Auckland houses/land will simply get more intrinsically valuable. That's what tends to happen with big cities that become 'international'.
The only way that would ever by stopped would be by unleashing an almighty flood of new houses in Auckland. And let's face it that ain't going to happen.
It is completely, 100%, about-face wrong.
Melbourne, Brisbane, Houston, Toronto, Sydney, Vancouver - have all added a slew of new building. Accordingly they are creating attractively low rents within modern accommodation.
Auckland has made certain rents are to be high with the buildings increasingly dated.
The "intrinsic values" of investment into Auckland are high cost and slow growth compared to other international cities. This is not a recipe for success.
Auckland is going to falter in comparison to the rest of the world.
You conveniently ignore the past two decades of data that show otherwise. Also seem to be ignoring basic principles of economics. Immigrants buy houses, which represents an increase demand. When demand goes up, prices go up (unless supply also goes up). There are lots of influences on supply and demand - immigration is definitely one of them.
http://briefingpapers.co.nz/wp-content/uploads/2015/08/graph-11.jpg
Rich immigrants buy houses and poor immigrants rent. House prices are dependent on capital inflow and outflow. Auckland currently has capital outflow of locals heading for the provinces and immigrants replacing them. It is a cycle that has happened before, but it reverses when capital becomes scarce and then seeks out the places with most opportunity. Which is why the biggest city generally does best.
But the problem is how that cycle might break. The opportunity inherent in a place isn't just number of people, it is also the availability of structures to allow that opportunity. And Auckland has had a decade where it decided not to build the structure people need - houses, apartments, offices.
"So whatever your view of how short of houses Auckland might be at the moment, it has to be conceded that the position MUST have worsened, and considerably, since the mid-2000s."
When we talk about supply and demand it needs to be recognized that the demand is strongly affected by credit availability, so even when there are not enough houses to house the population, there may be a decline in prices if credit availability has decreased. e.g. 100 people with access to $200,000 max credit each, trying to buy from 50 available houses will result in lower prices than 50 people with access to $1,000,000 max credit each, trying to buy from 50 available houses.
The number of people vs number of houses may make things more competitive, but if the underlying credit availability is cut off, prices will drop.
Record low interest rates, record high house prices, record level of borrowing for residential property, record high multiple of price to household income - what could possibly go wrong?
Simply looking at the supply/demand equation in terms of population verses house numbers ignores the fact that the population need dollars to pay for house purchases/rent. With stagnant real wages where are the dollars coming from?
Comparing Auckland with other so called "International Cities" is also a trap. Sydney, Melbourne, Hong Kong, London, Vancouver etc. etc. are all part of the same Central Banker debt induced ponzi. Prices ramped up and up as international interest rates are driven lower and lower by the CBs. Every man and his dog loading up on more and more debt to buy lower and lower yielding assets in the hope of some future capital gain.
To expect 10% compunding year on year growth of house prices with wage and consumer price inflation hovering at around 1-2% is madness.
For all the noise there will be a point in the future when we look back at this time and ask "how did that happen". Unless the air is released gradually from this bubble over the next 10-15 years the consequences will be catastrophic.
Sorry David, whilst I agree with you this might be the calm before the storm, the storm I foresee has very little correlation to yours.
There are many great attibutes about Auckland - it's coast and hinterland, its dining, and despite its mid winter grottiness its a pretty good climate. However I think it's quite far off being a real international city. It's infastructure is poor, its cultural scene is OK but not great, and it does not / cannot host major international events. Also the vibrancy and wow factor of the cbd is well beneath jnternational city status.
Hi Fritz,
Compare Auckland with where it was 20 years ago.
It's come rather a long way.
There's still further potential, of course.
And we can't discount the impact of opportunities like the America's Cup.
Finally, Auckland taxi drivers are so much more civil than their Wellington counterparts.
For me, 'Peak Auckland' was around 1993 - 2001.
We had experienced a wave of Asian immigration so there was already a good Asian food scene and some good diversity going on. High Street was awesome, a hive of urban coolness. The music scene was great and we already had the film festival. There were some really cool cutting edge cafes that you hardly see anymore. Plus housing was affordable and the traffic much saner.
The only international cities in Australasia are Sydney and Melbourne.
Down the pecking order are Brisbane, Auckland, Perth and Adelaide.
Btw I don't think there is any shame in not being an 'international city'. There are plenty of very nice smaller cities in the world that are very liveable, if not 'international'.
Wow there is so much negativity on this site about Auckland. I love this city. I have travelled all over the world and LOVE AUCKLAND. Returning home to blue skies, clean air, green grass and a fantastic harbor many New Zealander's just don't know how lucky we are. The rest of the world is waking up and now, just like our milk prices, we are competing for our property on a global market.
I have been very fortunate in the Auckland property market specifically in freehold apartments in superb locations close to the CRL entrance on Victoria (funded by the greater Auckland rate payers) and a minute from the new International Convention Centre in the CBD. For me purchasing in the secondhand market there is a sweet spot - about 10-15 years old (no leaks and a solid LTMF or EQ compliance issues) - paying roughly 2/3rds the m2 of a new building with car parks. The cars and congestion are here to stay. Every time inner city car park prices go up (thanks Sky City, Wilson, Ak Council) I increase my car park rents. The cars are here so even if immigration slows there will still be hideous congestion and as the petrol price returns to normal the opportunity cost of driving, parking, time en route, will make my apartments even more attractive. I buy for yield but have continued to be pleasantly surprised by LTCG which in my mind will continue to flourish given the shortage of labor to build, increased cost of construction, apartment building no longer even burrowing (eg The Pacifica) car parking, and the very nature of the leasehold and parks squeezing our CBD reducing the ideal land supply.
Housing affordability is a major problem but I think at the moment the freehold CBD apartment is a better way to go for some FHB or investors. Interested in your thoughts?
Clearly you haven't travelled as much as you claim. Auckland is one of the most boring middle/big cities in the world. Absolutely soul less, it lacks the best of the big cities and has all the worse of the big cities.
Weather is not bad though, a bit humid and unpredictable but not bad.
Sorry not wanting to gloat. At the end of the day we can all sit round complaining or we can look for an opportunity to get ahead. I am only speaking from my experience of what has worked for me and everyone will have their own recipe for what they are seeking in their investment strategy. I'd love to hear from other investors as to what is working for them and whether others agree with the freehold apartment opportunity. Let's try and raise the tone on this site from whoa is me to appreciating all the good things we have in NZ / Auckland and how we can maximise the benefits.
"length of membership" is usually the first clue to know whether an alt account is created. I thought you worked in IT, that should be basic for you.
I wasn't making fun of your grammar, it was just another clue because Double-GZ is the only other person here who tries to use common phrases but fails grammatically. "Neck of woods" should be "neck of the woods". And in your other comment above, "woah is me" should be "woe is me".
Idea? Message? I don't know exactly what you're tying to convey, but all this knowledge about freehold apartments basically confirm to me that you are a Real Estate Agent and interest.co.nz is your way of getting the feel of the market by trolling the comments section.
Let me guess - your agency is about to focus on selling more apartments since detached house sales have drastically gone down (someone mentioned 37% drop year on year?). But since apartments are cheaper, you get more sales, therefore more commissions. Didn't mean to spoil your secret, don't shoot the messenger!
Yes you are 100% right, NOT! (say it like Borat)
I am just an interested investor. I feel for the new generation too, want to set my kids up, and if I was entering the market now I would look to get a freehold 3 beddy around 700k and get 4 flat mates.
Hey a recent observation it appears apartments in the city are cheaper than some new suburb apartments but the thing to keep in mind is that apartments in the suburbs are vertically challenged compared to those in the central city so the amount of land under the property in the city is less. If houses fall, land could fall, suburban apartments would take a hit. Central city location, location, location.
"I was entering the market now I would look to get a freehold 3 beddy around 700k and get 4 flat mates."
Thats exactly what a mate of mine did and also I had one flatmate for years as well. The problem now is we have skipped a generation or two and the attitude of the youth has changed today, the next generation wanted a 4 beddy for $1M and didn't want any flat mates and the latest generation don't even want to work and have someone just give them the $1M house to live in.
The latest generation works to survive. They also have a $50,000 student loan because everyone around them told them they needed a university degree even though most of the degrees offer little value and do not provide them with a usable skill to get work.
I find it unusual that you think the latest generation expect to be given a house. Most of them are resigned to the fact that they'll never own a house, or it will take 10 or more years of working. Your comment does not align with the youngest workers having the highest savings rate. Most of it will be going into student loans and kiwisaver. The rest may initially intended as a house deposit until they give up.
I already see the youngest workers being blamed for everything. One meme I saw last week complained about millennials eating out too much, and then they were blamed for restaurant franchises failing due to lack of customers and spending. The same with Las Vegas where they are complaining that millennials aren't wasting their money recklessly gambling and instead expect entertainment or service for their money.
You appear out of touch.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.