It expects strong demand for attractive yet affordable developments to be sustained in the coming years
New Zealand Mortgage & Securities (NZMS)’s latest report has revealed a surge in first-home buyers in Auckland, leading the region’s real estate resurgence.
NZMS, which currently funds more than 400 new residential townhouses in West and South Auckland, revealed a vast number of sales in the region – with first-home buyers accounting for a majority of the sales.
“The sheer volume of sales in West and South Auckland is something we haven’t seen for three or four years. Let’s just say first-home buyers are certainly leading Auckland’s real estate resurgence,” James Kellow, director of NZMS, said. “With new housing stock and developments selling fast, developers are being forced to activate sites they had land-banked much sooner than most would’ve anticipated.”
He explained that Auckland’s first-home market is going gangbusters again because more young Aucklanders realised that they need to “dial back their expectations” when they climb the housing ladder.
“The surge of first-home buyers also reflects that developers are better meeting the market by regenerating well-located brownfield sites close to the likes of public transport – helped by more permitted intensification in Auckland Council’s Unitary Plan,” he continued.
“Developers know that if they want a sale, providing affordable, well-located, and well-designed smaller stock is where it’s at. Building 200-sqm homes in greenfield subdivisions on the outskirts of Auckland has certainly slowed. Many of those sections you’ll now see languishing.”
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Kellow expects strong demand for attractive but affordable townhouse and apartment developments in the coming years, with supply still probably struggling to catch up.
“With rents continually going up, prospective first-home buyers are waking up to the record-low interest rates. In fact, in many cases, it’s cheaper to service a mortgage if they can get a deposit together,” he explained.
“There are now two distinct types of first-home buyers in Auckland: Those who can access some parental capital and buy in the established central suburbs; and those who can’t and are heading to the likes of developments in the west and south. Regardless, homeownership over the long term will prove a smart move for all of them.”
