Home-ownership rates in New Zealand have fallen significantly in the 21st century, with increasing numbers of people renting instead. Apartments have seen a surge in popularity, with median weekly rent increasing 20% in the last three years, according to the latest Trade Me Property Rental Index.
What was once an intrinsic part of life for the New Zealander; buying your own house by the age of 40, has deteriorated into an unobtainable fantasy for many Kiwis.
The reasons for this shift are various (e.g. an increase in one-parent families impacting home ownership rates). One significant factor has been the skyrocketing cost of NZ land and housing. As the world in which we live shrinks due to technology, media, rapidly expanding rates of travel and immigration, and as our cities become more populated, we find ourselves having to consider other viable housing solutions. We are being challenged to consider other ways to enjoy a good lifestyle.
Apartment living is the norm in many countries while the standalone house is the exception. Housing developments in NZ are being increasingly tailored to the needs of ‘Generation Rent’ and there are some lovely, purpose built, well-designed communities available for people to buy into now, which are increasingly popular.
Innovative solutions in heritage buildings, and conversion into residential housing of unused commercial or retail buildings in our city centres, can provide affordable living in an inflated market. It encourages businesses into the retail area too. The resulting supply and demand for inner-city activities, entertainment and eateries generates a vibrancy and healthy economic growth.
Buying into a unit title development is one viable way to invest in the rental market, or it can be a great way to begin on the property ladder.
The rights and responsibilities of a unit owner who shares some of that property however, are quite different to that of a stand-alone house owner, so before investing in an apartment it’s advisable to get a building report to check out matters like weather-tightness, what’s behind the walls, when the block was built, building defects, earthquake risk and fire safety.
Some important factors to consider before buying or renting an apartment are:
PROS
- Units are often cheaper than suburban housing.
- They are more centrally located.
- They suit a variety of people groups from university students and gap year tourists, through to well paid professionals.
- No personal responsibility for lawns or gardens – tenants can just walk to a nearby beach or park to enjoy nature and smell the fresh-mown grass!
- Low maintenance. Building maintenance is taken care of by the landlord and costs are shared between all owners (Body Corporate).
- “Townhouses, apartments, and units are typically warmer and drier than houses” (quote from Trade Me Head Of Property, Nigel Jeffries.
- A great community atmosphere can be developed with neighbours, by gaining a balance between convenient support without the meddlers.
- Amenities – apartment complex living usually brings access to benefits such as a common room, swimming pool, barbecues, a gym, covered parking, and a security system.
- There can be a great variety of (free) and easily accessible events/perks to enjoy right on your doorstep - a multi cultural, ever changing variety of experiences without international travel, including quick, easy access to work, restaurants, cafes, shops, parks and nightlife.
- Less commuting by car or public transport compared to suburban living; saving money and reducing traffic and parking stress without breath testing!
- It’s conducive to achieving a better work-life balance and you can enjoy walking more.
CONS
The body corporate structure….
- Ensure you read and agree with the body corporate information, so you’re not rudely surprised later: discover the annual fees, rules and responsibilities that belong with ownership.
- You can't impulsively make changes to your own apartment as the body corporate protects the plumbing, wiring, flooring and heritage features. It can also involve waiting for other apartment owners to agree on things to be done, like external painting.
You need to attend and vote at body corporate meetings regarding unit title development, such as levies, insurance and repairs.
- You may not have a carpark, or easy parking access for your tenants/guests.
- Possibly not so good for the quiet life, since city noises, air-conditioning units atop buildings, and the cooking smells or cigarette smoke of close neighbours can be irritating (depends on the building, e.g. double glazing cuts noise etc).
- No pet policies may apply (usually with older buildings rather than newer ones). Some may see this as a pro!
- Present legislation is a bit loose - some MPs are actively campaigning for improvements since the city’s infrastructure needs to adapt to cope with greater housing intensity.
A final tip for those wanting to buy an apartment: According to Joanna Pidgeon of the Auckland District Law Society, you should protect yourself by buying in the name of a company, not as an individual. "That way, there's limited liability. If you can't pay your body corporate fees, you can liquidate a company. If it's bought in the name of an individual, that person can be bankrupted for non-payment”.
Whilst apartment living does not suit some people, there is definitely demand for it. Urban tenants around the country can expect to pay a premium for apartments, so it’s well worth considering as an investment prospect.