Who Is Buying Inner City Auckland Apartments?

[muppet]

Hi Guys

Two pieces of news from Cairns, Lockie fortnightly newsletter:

Who Is Buying Inner City Auckland Apartments?Over the next 12 months nearly 5,000 new inner city apartments will come
on the Auckland market. This is on top of the existing supply of nearly
8,000. This begs the question who is buying all these apartments.
Recently Bayleys Real Estate has undertaken some research to obtain a
snap shot of these buyers:
" Around 60% are being purchased by resident buyers and the
remaining 40% by offshore parties.
" Fairly evenly split between owner occupiers at 55% and 45% for
investors.
" Those in their 40's are the largest purchasing group, followed
by those in their 30's, then their 50's.
" More couples are purchasing apartments than single people
These results are interesting as many people think most apartment
purchasers are young, single and investors. This is not the case.


Mortgage Rates Across the Ditch

Currently our Official Cash Rate is 5.50% and in Australia it is 5.25%.
As this is the main funding mechanism for determining mortgage rates you
would expect them to be a little lower in Australia than here. This is
the case. The average bank floating rate in New Zealand is 7.75% and in
Australia it is 7.07%. The average two year rate in NZ ranges from 7.30%
to 7.55%, whereas in Australia the range is from 6.60% through to 7.75%.
The big difference between the two markets is that our rates are much
more bunched together. Nearly all our prime floating rates range from
7.40% to 7.75% - a range of 35 points. In Australia the range is from
6.49% through to 7.07%, a difference of 58 points. The same is true for
fixed rates.


Are We Paying Too Much for our Mortgages?

Some may believe that because we have the highest mortgage rates in the
OECD countries, our lenders must be earning the highest margins. The
recent KPMG, 2004 Financial Institutions Performance Survey show this is
not the case. Margins for the major bank lenders in various countries
for 2003 are

NZ 2.65%
Australia 2.66%
U.K 2.21%
USA 3.25%
Canada 2.07%

We are right on a par with Australia, which is the easiest country to
compare ourselves with, higher than the UK and Canada, but lower than
the USA. The full report can be obtained from KPMG at
http://www.kpmg.co.nz/apps/core.kpmg....jsp?id=101902

Regards

[donna]

Thanks Muppet.

That was a good read.

Cheers,

Donna

[CJ]

Is anyone on here buying apartments? The focus on this forum appears to be the cheaper suburbs of Auckland and smaller towns down the line with the higher cashflow.

[cube]

Hi CJ,

The focus of the forum is driven by the people posting questions/opinions/answers/articles and general gossip from and around the world of property investment.

There have been questions etc about apartments, but I imagine that the number of non-apartment investment properties across NZ far outweighs the number of apartments.

Feel free to post any questions/information etc you would like to see.

And to answer your question, no I'm not buying apartments!

cube

[graemeh]

Is anyone on here buying apartments?

We have one apartment in Wellington and will have three more in Wellington by end of July once they complete construction. We also have a townhouse in Queenstown that will complete April 2005.

One thing we have learnt is that banks don't like them so don't try to buy anything on the small side (over 50m2 is best, over 40m2 is ok with a few banks).

Another thing about apartments is there is limited scope to add value so it is essential you must buy at a good price at the start.