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Thread: Auckland inner-city apartment market

  1. #1
    Join Date
    Mar 2005
    Location
    Auckland to UK
    Posts
    1,120

    Default Auckland inner-city apartment market

    Tenants profit in rental unit glut

    27.09.05
    By Anne Gibson and Bernard Orsman

    A national survey shows the housing boom has created an over-supply of rental properties that is forcing landlords to drop rents, particularly in the volatile Auckland inner-city apartment market.

    Although house prices continue their spectacular rise, tenants have had a dream run in the past three years from falling rents, figures released by Massey University's real estate unit show.

    The fall is hurting landlords who bought in the housing boom expecting returns to improve, but is leaving tenants in a better financial position.

    The median rent of $250 is virtually the same as it was a year ago and Auckland rents are static or falling.

    Median rents are up in Tauranga from $240 to $260 and in Hamilton from $230 to $250.

    North Shore and Manukau median rents have been stuck on $340 and $300 respectively for a year.

    Waitakere rents have dropped from $298 to $290 and Auckland City's have dropped from $325 to $320.

    The biggest drops have been felt in the Auckland inner-city market where the average cost of a two-bedroom apartment has fallen from $420 to $372 in two years.

    Economists, property analysts and real estate agents are urging investors to be cautious about the inner-city apartment market, saying prices are falling from the glut of "cubby hole" apartments flooding the market.

    Property analyst Kieran Trass said the inner-city market could fall in value by up to 40 per cent in the next few years from an over-supply, dwindling international student numbers, lack of demand from tenants and plummeting returns.

    Martin Dunn, head of apartment sales specialist City Sales, said thousands of tiny apartments of dubious worth were coming on the market, many of them sold off the plans by unlicensed agents. He had met a couple yesterday who paid $285,000 for such an apartment, which he said was worth half that.

    Mr Dunn said there was a second market of quality apartments where sales were very robust.

    BNZ chief economist Tony Alexander said the huge over-supply had been hanging over the Auckland apartment market for two years.

    "You are going to have prices falling ... That is likely to be the story of that Auckland inner-city apartment market for the next 18 months or so."

    Mr Alexander said the country was developing an over-supply of rental accommodation but he was cautious about falling rents feeding through to lower house prices, saying the market had kept rising a year longer than forecast.

    "The chances are prices are going to edge back, but only a small amount, and it is going to be in the regions where the price gains have been the greatest, such as Nelson and Hawkes Bay," he said.

    Massey University's national survey of rental property is based on figures from the Department of Building and Housing and Quotable Value.

    Massey professor Bob Hargreaves has criticised the lack of investor information on rental housing and published a list of total returns from rental property nationally which showed Auckland and Wellington were the best performers.

    But Auckland was also the riskiest place for rental property and Hutt Valley one of the safest.

    AUCKLAND CITY APARTMENT RENTS

    1 bedroom

    July 2003 - $330
    July 2005 - $290

    2 bedroom

    July 2003 - $420
    July 2005 - $372

    All

    July 2003 - $362
    July 2005 - $340

  2. #2
    Join Date
    Aug 2004
    Location
    Inland Canterbury, NZ
    Posts
    8,390

    Default

    Close Up did a feature on it last night on telly - basically, if you're going to invest in inner-city rental property, make sure it's a long term investment!!

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