Foreign Property Buyers purchase NZ apartments

Article Source: NZ Herald and shared by the property and conveyancing law team at Quay Law.

30 January 2013

Parents of foreign students are flying into Auckland on short visits to cram in apartment viewings and making quick deals for children studying here.

The apartment market had long been dominated by investors but estate agents are noticing a shift toward owner-occupier buyers.

Apartment sales are almost back to where they were before the global financial crisis hit in 2007 and 2008, according to figures from the past eight years analysed by the Herald.

Harcourts real estate agent Larissa Tsapko said she had shown apartments to about 30 groups of people in the past two months. Ninety per cent of them were parents looking for units for their children – more than she had seen in her four years selling apartments in central Auckland – and she had had more inquiries for later in the year.

Many were from China, Russia and the Middle East, she said. Waterloo St, Gore St, Parliament St and Eden Cres were popular areas.

Hayden Butler, who heads Bayleys’ city apartment team, said he had hosted three separate groups of Asian parents this year.

“They are in the city for a few days – three of four days – and cram in half a dozen viewings a day. It’s a business trip, not a sight-seeing holiday.”

They wanted short settlement terms – sometimes as quick as three weeks – and were making offers on the spot, Mr Butler said.

Many were buying in what he called the “university quarter”, a section of the city with about 30 or 40 apartment buildings around the University of Auckland and the Auckland University of Technology. It encompassed Symonds St, Wakefield St and the top of Queen St.

“For some parents, they see it as a good investment,” Mr Butler said.

“If they’re going to be paying for accommodation for three years, they might as well buy something and get a return, rather than paying rent … And it becomes their home away from home, so when they come and visit, they stay in the apartment with their kids.”

Owner-occupiers entering the market tended to shun the smaller apartments so purchase prices were higher.

Real Estate Institute chief executive Helen O’Sullivan said the apartment market was one of the hardest hit during the crisis but it was recovering.

Figures provided by REINZ show $513.6 million was spent on Auckland city apartments last year.

The past eight years has seen steady sales, about 300 or 400 each year, but prices dropped significantly during the crisis. Just over $696.6 million was spent in the city in 2006 and it dropped to $587.7 million the following year before a fall to $280.7 million in 2008. It has slowly been creeping up since.

The data covered the suburbs of Auckland Central, Arch Hill, Cox’s Bay, Eden Terrace, Freemans Bay, Grafton, Grey Lynn, Herne Bay, Morningside, Newton, Point Chevalier, Ponsonby, St Marys Bay, Western Springs and Westmere.

For each year, the sales represented around 30 or 40 per cent of total national sales of apartments.

The median price for an apartment last month was $237,073. It was $280,000 in December 2007, before dropping to $187,000 in December 2008. Ms O’Sullivan said figures were not held on the ethnicity of home-buyers.