Thanks to New Zealand’s growing population and ever-expanding cities, apartment living is on the rise. In the face of this trend, it’s important for both buyers and sellers to understand what is taken into consideration by the market when evaluating whether apartment ownership is for them.

Affordability

This is particularly common in Auckland where the average house price sits at circa $950,000. Last year alone TradeMe announced the average asking price for a two-bedroom apartment in Auckland had increased by almost 50 percent to around $485,000, up $80,000 in twelve months.

Key criteria 

With this in mind, it’s important to know what to look for in an apartment to capitalise on its value. The orientation of the unit is an important factor when it comes to buying and selling as it could save you money. By choosing a north facing apartment you have the advantage of natural light and additional warmth during the day, which adds to the overall appeal of the apartment. Anywhere between 20ºW - 30ºE of true north is a good compromise, and remember ‘north’ and ‘true north’ are not the same.

Orientation isn’t the only factor to consider, there’s also the positioning of the apartment to keep in mind. Generally, the higher up you go in an apartment complex, the greater the price. With height comes more natural light as well as more security, privacy and, potentially, that all-important view of the city.

Lending

One thing to be mindful of when selling or buying an apartment is the lending available to buyers. How banks structure mortgages for apartment owners is quite different to how they structure mortgages for housing owners. For example a bank can lend to a new house buyer at 80 percent of the house’s value. In the case of apartments, however banks will only lend 80 percent if the apartment is of a specific size. If an apartment is under the specified size, then banks may only lend 50 percent of the apartment’s value.

Unfortunately, the size limit varies from bank to bank, and for this reason using a mortgage broker could be a good idea if you are considering buying an apartment. Why are banks still so conservative?-the smaller the apartment, the less likely it will attract buyers in the event of a mortgagee sale.

Owner occupancy rate

Auckland has 3,000 proposed new apartments to be completed by the end of 2018, 44 percent in the CBD and 28 percent in both the city fringe and suburbs. However, with the amount of people who own and occupy their own home on the decline (down 13.5 percent since 2006) this is not good news for existing apartment owners. Apartments that aren’t owner occupied (i.e. rented out by investors) are not typically given the same level of care; the occupants are also less likely to advocate for social and structural improvements. 

New developments

With more apartments on the way, there is a risk that your apartment could be devalued by these new developments. Views, privacy and natural light may be compromised as a result. As an owner or potential buyer, it is therefore important to keep across the latest building and development consents in your area.

Although there is a definite rise in apartment sales, it’s important to know what you’re looking for and what to expect, especially if it’s going to be a permanent home. From the location, to the neighbours, it’s vital to consider the ins and outs if you are in the buying or selling mindset.

For more information and tips about the ins and outs of apartment living download our free guide: