Apartment living has never had more appeal

For decades, the Kiwi dream has involved a standalone home on a quarter acre section, however in recent years, with house prices continuing to rise, this dream has become unaffordable for many. This is especially true for those trying to get onto the property ladder for the first time. While New Zealanders have been slower than people in other countries to embrace the idea of apartment living - the Kiwi market is now mature and going from strength to strength.

At Barfoot & Thompson Projects we’re seeing record activity in the apartment space and we anticipate continuing growth in multi-unit housing. In 2020, there was a 175% increase in the number of apartment sales in comparison to the same period in 2019, spread over a number of projects including Westlight, Urbizen, Crest, The Ridge and 30 Madden. So, what’s driving this staggering increase in sales? We know the target markets and what they’re looking for, whether it’s a first home, something mid-range, or top-end luxury, and we provide design guidance and develop an appropriate sales strategy around the specific target demographic.

Demand has been strong for good quality owner-occupier apartments across all price bands and this market has continued to show good depth. For instance, I would estimate that 90% of the residents living in Wynyard Quarter own their property.

Apartment living is all about location and amenities.

People seek convenience and easy access to transportation. The commute time for those living in outer suburbs that are part of the Auckland sprawl, can be a gamechanger for many who don’t want a long commute to work. People are willing to sacrifice the idea of a home and yard for convenience and nearby amenities such as shops and restaurants.

Developers are getting creative

Even with the provisions in the Auckland Unitary Plan, not everything on a buyer’s wish list can always be met at a particular development and we’re finding that some developers are getting creative to accommodate buyer needs. A good example to share is of one of our recent developments, a multi-unit building (21 units) in Mt Eden, where car parks were not feasible, but the location was fantastic.

The design incorporated a free electric bike with every unit, in addition to having e-scooters available to residents. A shared electric car (with a charging station onsite) that residents can book to use when necessary was also made available. Buyers loved the innovative concepts and these features became a selling point for the project.

Some developers are continuing to partner with KiwiBuild thus broadening their pool of potential buyers to include qualifying first home buyers who are keen to get on the property ladder as soon as possible.

Looking towards the future

In New Zealand we have been incredibly lucky when it comes to COVID-19 so far. In many ways we are the envy of the world but that doesn’t mean we were totally unaffected, and this is particularly true in real estate with respect to developments.

30 Madden

Urbizen

Westlight

It’s clear that Kiwis have embraced apartment living and continue to do so, as reflected by the success of our various projects. That said, in the short term, I don’t see large master planned communities like Hobsonville Point getting the backing they need right now, I think that overall, there is still a mild aversion to the idea of densely packed housing. Banks are still very risk averse as the dust settles globally around the impact of the pandemic and developers wanting to take on something of that scale may find it difficult to secure finance.

In short, there are going to be limited resources and interest from financial institutions so undertaking massive builds is going to be difficult. From our experience, smaller developments with 10 to 30 units will be more common in Auckland. Developers won’t want to commit to a project that is going to take years to come to fruition. Instead, they will want to get in and out in 12 to 15 months.

Apartments as a housing solution

With the market as hot as it has been recently and the overwhelming housing crisis, apartment living as a concept needs to be embraced. First home buyers need to be realistic with their expectations, understanding that they won’t be able to afford anything equivalent to what their parents were living in at the same age. Failing to understand this will only lead to disappointment and wasted time. A first home is not a life sentence, and apartments should increase in value over time.

Buying off the plans means you can purchase a unit without the price wars that can happen in a competitive auction environment. There are display suites at most developments that will give you a solid feel for what you are buying and our experienced off-the-plan salespeople are experts at guiding buyers through this process. Also, you are not responsible for mortgage payments until the property is completed and settled.

Matt Baird, Projects Manager, Barfoot & Thompson