Eyes on Auckland: Property Investment Opportunity in New Zealand’s Largest City
Auckland continues to make headlines... and for good reason. When it comes to property, New Zealand’s largest city is stirring. Thanks to a number of factors, not least a growing population, city apartment sale prices have risen substantially over the last 12 months – a rise by 12 percent, to be exact.
Any way you look at it, average sale prices don’t just go up by 12 percent in just as many months for no reason. Demand for Auckland apartments, combined with low months’ supply, is not only driving prices up, but also the craving for more sophisticated choices from new buyers.
Stats speak for themselves. One-half of 3,795 apartments are selling simply off of plans – yes, off of plans and not having even been built yet. Auckland is expected to experience its highest number of apartment completions ever in 2018. By 2020, nearly 140 new apartment buildings will take their place in the cityscape. Developers see there is a void to fill, and they’re striving to profit from the demand. With that being said, are they really keeping up? Are Auckland’s apartment needs really being met?
Auckland has a population of just over 1.5 million and climbing…. and it only has 12 months’ apartment supply. Pete Evans, of Colliers International, has some thoughts about this remarkably low number:
“In major cities with population growth we would expect supply to be anywhere between 12 to 24 months. Most apartment project take two to three years to build, so the current under supply will remain in the foreseeable future.”
Sure, Evans' comments might sound like positive remarks about Auckland’s apartment market, but they also reveal a gap that needs to be filled. Auckland has become the perfect an opportunity for higher-quality developers to come in and not only help with the city’s months’ supply, but to also meet buyer desires and expectations as average sale prices approach those of luxury units.
More Demand expected for Auckland's high-end residential apartments
Auckland’s average sale prices are certainly rising to those of a world-class city. With the 12 percent increase in just the last year, $1,120,000 is now what an average apartment in the city of 1.5 million is going for. Apartments in the CBD have jumped even more – by 29 percent –, up to $1,320,000. The suburban market is up also by 12 percent as well while sale prices in the city’s fringes have jumped 15 percent within the same time period... in places like Grey Lynn and Kingsland, among other. While population growth does drive demand, so does apartment quality. Opportunities are opening in areas for more high-end developers to meet the expectations of higher prices.
New Zealand’s political and economic stability certainly make it appealing – eyes on its largest city. Auckland is growing, bringing apartment prices up while developers are scrambling to keep up with demand. As prices climb, more sophisticated buyers are on the horizon... and a buyer like this is looking for higher quality apartments. Anyway you look at it, Auckland represents an opportunity for developers to come to the market and build more higher-quality apartments.