Buying Apartments Off The Plans Is Popular Again
It has become popular again for people buying apartments off the plans both for homes and as investments.
With house prices increasing in Auckland higher density living is becoming a reality and a necessity, so apartments are being built in the CBD and now in the suburbs too.
Apartments have been popular in cities around the world, but in New Zealand we have tended to resist living in confined spaces and there has always been a preference for a big section with a backyard. The reality is that with population increasing there has become a bigger demand on land in the cities and this has seen prices increasing to a point where Kiwis are now prepared to look at living in apartments and high density townhouses.
When you travel to most international cities you will find that most of the population live in apartment style living.
So why is New Zealand different?
The Kiwi dream was always to live in a quarter acre section in a freestanding house with a garage, a backyard and a vege garden.
That dream was created in the 1960’s when the population was 2.372 million and the economy was booming on the back of meat and wool exports to the United Kingdom. Today the population has increased to an estimated resident population of 4.600 million and growing by 86,900 (1.9 percent) in the year to June 2015.
Things have changed in New Zealand and people need to change too.
Most people no longer expect a quarter acre section but they still expect a section and are often critical of the smaller sections which we see being sold today.
There Are Some Great Apartments Off The Plans
Some people think of apartments as creating concrete jungles like those pictures that you see from the old Soviet Union, but today we see some great designs for apartments off the plans and completed projects.
The apartments and townhouses being built in New Zealand today are designed with living in mind with great shared spaces.
Hobsonville Point is a planned housing area that is an example of what good planning can achieve.
This new suburb has been created with an overall plan and the apartments, townhouses and free-standing houses are all built on smaller sections within a community with lots of planned shared spaces including parks, playgrounds, walkways, coastal recreation areas and amenities such as shops, cafes and restaurants.
Unlike most traditional suburbs, in Hobsonville Point you will find entry level $450,000 homes next door to $1,5 million plus free-standing houses and it is working very well.
Apartments Will Fix The Housing Problem
It is claimed by many in the media and political arena that there is a serious housing issue, and on the surface there is a lack of housing that is affordable for first home buyers.
I have argued for some time that there are in fact three other issues that need to be addressed first;
- People need to adjust their expectations – buying your first home is not easy and a first home buyer should start off with a home they can affords and over time if their finances are managed well they may be able to move up the ladder into a nicer home.
- The banks and Government need to focus on apartments – why not make it easier for people to buy an apartment as a first home? By nature an apartment should be cheaper as there is not the same cost for land; however the banks have always treated apartments differently making them harder to buy with larger deposits being required. The Government could provide incentives through the Welcome Home Loans scheme which they have now or introduce other incentives to make it easier for first home buyers.
- Incomes, not house prices are the real issue in New Zealand – the whole housing affordability is based on the fact that housing prices have increased faster than incomes, yet people focus on house prices and incomes are rarely mentioned. If incomes increased then the ratio will re-balance and house prices will no longer be deemed over-priced.
Okay, so these issues are easy to spell out, but they will need a real effort if they were to make any difference.
Some New Build Projects Will Hit Hurdles
In is natural that not all building projects will continue.
We have recently heard that the Flo Apartments in Avondale is not proceeding which is a real shame and is leaving some people quite annoyed and looking for answers. The fact is that building an apartment complex is a big and expensive project and at times the developer will need to cancel or amend the project.
Buying Apartments Off The Plans
An advantage in buying apartments off the plans in a market where prices are increasing is that you buy at today’s prices but apart from the deposit you do not start paying the mortgage until the apartment is complete and therefore would have expected the prices to have increased and therefore your equity to have increased as well.
There is a risk that prices might go down too, but most people don’t think this will happen as we are going to have a housing shortage for a few more years yet while supply catches up with demand – unless of course there is a significant change.
Are Apartments The Answer?
Most people will have an opinion and while young with families might desire the larger free-standing houses or even a lifestyle block; however the budget may not allow this. As people get older they may wish to downsize into an apartment of townhouse that is easier to maintain.
The preference is going to be individual.
I personally moved my family off a 3-acre lifestyle block in Kumeu and now live on a section under 400 sq mtrs in Hobsonville Point. It was not something that I expected to do, but after getting a good understanding of what was being created in Hobsonville Point we decided to at least try the change. You can read about my experiences on my personal blog.
We tried and have now been a resident for almost 1-year.
It is certainly an easier lifestyle and we have more time to do other things. The children love the open spaces and being able to meet their friends at the parks which was always hard on a lifestyle block.
Of course, buying apartments off the plans is not going to suit everyone, but it is worth considering.