Covid drags down ‘shoebox’ suburbs
Property values in Auckland’s “shoebox” suburbs have slumped and stand to lose the most from a market slowdown, new OneRoof figures suggest.
The latest house price data from the OneRoof-Valocity’s House Value Index, published in full in tomorrow’s OneRoof Property Report, shows the average property value in Auckland’s inner-city suburbs — where onebedroom and studio apartments dominate — has grown less than 10 per cent in the past 12 months, completely out of step with the 25 per cent surge seen elsewhere in the city.
The data shows the lockdown has also hit the suburbs hard. The average property value in Auckland CBD, the city’s most affordable suburb, rose just 3.6 per cent to $662,000 over the past three months — compared to 6.6 per cent growth seen in Auckland overall.
House price growth in neighbouring Eden Terrace and Newmarket over the same period was 0.8 per cent and 1 per cent respectively, but Grafton’s market collapsed, with lockdown wiping $16,000 off the suburb’s average property value.
Long home to uni students and renters, Grafton is the only suburb in Auckland City where the average property value has dropped since August.
However, the slowdown in the inner-city property market is an opportunity for first-home buyers to get a foot on the property ladder, say two leading real estate agents.
Daniel Horrobin, director of City Realty Group, and Steve Kirk, one of his top agents, say banks are now much more amenable to lending on shoebox apartments, so first-home buyers should be open to them.
Kirk says apartments over 38sq m qualify as a standard apartment with the ANZ, and apartments of 40sq m or more qualify with most other banks.
“You can pick up such an apartment for $400,000 and that’s great for a first-home buyer,” he says.
Horrobin says investors, who have been hit by the loss of the international student market, should also keep in mind the “massive” opportunity there is now, which is only for a limited time. “Once those borders open that’s going to immediately put pressure on available units, which is going to put upwards pressure on rents, which will offer better returns for investors.”
Suzie Wigglesworth, general manager of Auckland central residential for Bayleys, says, however, that firsthome buyers prefer the suburbs, although that may change.
She says apartment sales have stalled not only at the budget end but also for more expensive apartments — people just don’t want to live in the dead CBD right now, she says.
A few years ago a push to attract firsthome buyers into the shoebox apartment market didn’t work because they just didn’t want to be there, Wigglesworth says. “We’ve got apartment buildings where we’ve got product below the KiwiBuild threshold and we still can’t move them, and that’s in the CBD. Top-end product is struggling, too.
A number of apartments are available at the International [Princes St], she says. “They are completed apartments, amazing views, fantastic facilities, good quality and nobody is interested.”
Wigglesworth thinks first-home buyers have yet to grasp it can be better to buy sooner rather than later.
Ten townhouses in the Parkwood Estate on Westgate Drive in Massey sold for under $1 million the day the development was launched. “That’s what the first-home buyers are buying,” she says.
Wigglesworth expects the Government’s focus on high-density building around key transport hubs will bring more interest.
“I think you are going to see a lot of activity in places like Panmure, for example, where the train station is.”