Low interest rates look set to further boost apartment sales

Thursday, 10 December 2015

Low interest rates look set to further boost apartment sales

News that the Reserve Bank has cut the Official Cash Rate will only further energise already strong apartment sales, says Dominique Dowding - chief executive of Alexandra Park.

Earlier this year Alexandra Park launched its ambitious high-end urban village development and has since sold almost all of its freehold apartments in stage one, with stage two now also selling well.

Ms Dowding says many of their buyers so far have been cashed-up empty-nesters and discerning baby-boomers. However she predicts with interest rates now set to fall to record levels, the Auckland Trotting Club’s Green Lane West development will become even more attractive to more people.

She says many single or young people who might have been renting will now start doing the maths on the prospect of buying a quality freehold apartment.

“More and more people are feeling comfortable about buying good quality apartments off the plans - our buyer statistics show that as do recent Auckland-wide real estate figures. A further fall in interest rates will only bring more people into the market and into our display suite and so that’s really exciting,” says Ms Dowding.

Pete Evans, national director of residential property marketing at Colliers International, agrees that falling interest rates will get renters thinking.

“With apartments at Alexandra Park starting from $590,000 more people will be doing their sums, particularly when you also consider rents will only rise and capital gain for property owners remains strong in Auckland.

He says, for instance, if someone can get a deposit together of $90,000 and borrow $500,000, even at 5% interest that will cost about $25,000 a year to service or about $480 a week in mortgage repayments.

“Buying an apartment will actually become more affordable than renting for many people, when you consider Trademe now says the average rent for most Aucklanders in a typical property is $499 per week.

“Obviously many will now be able to secure a mortgage rate much less than 5% so buying becomes even more doable,” says Mr Evans.

Ms Dowding says after nearly a decade of the Auckland apartment market in hibernation, an array of apartments currently selling off the plans and in competition is actually proving to be helpful as it has created some real critical mass and choice in the market, and is driving up buyers’ expectations.

“Even if people can score a great mortgage rate, they’re doing their homework more than ever before and are particularly keen to talk about urban design, architecture, construction materials and workmanship. Not to mention a safe and liveable community as well as enjoying a strong capital gain. That’s exactly our proposition and it’s working.

“All these large residential developments going on simultaneously around Auckland seem to be really energising things. A further fall of interest rates will only see more people this summer enter the real estate market and that’s got to be good for property ownership rates and the Auckland housing market all round,” says Ms Dowding.

Alexandra Park’s on-site apartment display suite is open from 12pm to 4pm daily or by appointment by calling 0800-275-484 or visitingwww.apliving.co.nz

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