KiwiBuild Outselling Open-market Projects By Five To One
Affordable KiwiBuild projects in suburban Auckland have achieved almost five times the average sales rate of the wider new apartment market, a new development survey shows.
The research also found Covid-19’s impact on residential construction has been less significant than the delays experienced in previous years due to industry capacity constraints.
Colliers International’s latest Auckland Apartment Project Survey looked at 58 projects with a total of 3,733 apartment units during the first half of 2020.
Thirty of these projects were under construction, 24 were selling off the plans and four had been completed.
Pete Evans, National Director of Residential Project Marketing ay Colliers, says while Covid-19 has caused some delays to construction, projects are now generally on track.
“Our survey found the delivery of new apartments in the first half of 2020 was impacted by the by Level 3 and 4 lockdown, but the delays were less significant than those in previous years.
“Back in 2017, the construction sector was hugely under-resourced and delays were rife. Any new apartment projects that commenced construction between 2015 and 2017 were generally 12 months behind schedule, or in some cases even more.
“By contrast, new projects that started construction in 2018 and 2019 are generally still on track, despite the delays caused by Covid-19.”
Evans says KiwiBuild has been a significant factor.
“KiwiBuild has not only helped new housing projects to commence construction, but has also boosted the overall sales rate. The Colliers survey found KiwiBuild projects located in suburban Auckland achieved almost five times the average sales rate of non-KiwiBuild apartment projects in the first half of 2020.
“This is part of an ongoing trend, with KiwiBuild projects selling seven times faster than other projects surveyed in the second half of 2019.
“Location is one of the driving factors. Most of the new KiwiBuild projects we surveyed are in good suburban locations close to transport and amenity, where first home buyers are the most active sector of the market.
“Affordability is the other key factor. For years, very few developers were providing affordable new dwellings, and cashed up investors were outbidding them for existing homes in the auction room.
“By comparison, buying a new KiwiBuild home is an easy process for young and not so young first home buyers.”
For first home buyer Reah Cabello, KiwiBuild has been a lifeline.
“My husband and I have been trying to save for almost 10 years, but it has been really hard on our incomes, especially with the rising cost of living and the expense of a child in private schooling.
“We first started looking to buy eight years ago, but we were usually declined by the bank for not meeting deposit and income threshold requirements. We even tried venturing to Papakura, Pukekohe and Pokeno to look for a cheaper house.”
After years of setbacks, Reah and her husband were finally able to buy a home at Kōtuitui – a new KiwiBuild development of Ken Crosson-designed terrace homes in downtown Manukau City.
“We can’t keep up with soaring house prices. We can’t compete with wealthy investors. But through KiwiBuild, we will finally get our own home that we’ve been needing for so long.
“We bought a three-bedroom unit within the $650,000 regional price cap, using KiwiSaver and a First Home Grant to cover the 20 per cent deposit.
“We’re absolutely thrilled with the thoughtful, family-friendly design and the convenient location, close to public transport and the Manukau shopping centre.”
Kōtuitui comprises 61 terrace homes including 36 KiwiBuild dwellings in the first stage, with prices between $590,000 to $775,000.
The project sold out within eight months, with a number of sales taking place during the initial Covid lockdown in March and April. A second stage of open-market homes is due to launch soon.
Suburban projects like Kōtuitui are leading the market, with the Colliers survey finding suburban apartments accounted for more than two out of every three sales in Auckland in the first half of 2020.
The once-dominant CBD apartment market now only accounts for 12 per cent of sales and the city fringe 21 per cent.
The Colliers survey found the best-selling project in the first half of 2020 was not a KiwiBuild project, but Risland Albany, with 60 unconditional sales.
Evans says the project comprises 141 affordable units in a medium-rise apartment building with a secure basement car park, only two minutes from Westfield Albany, the busway and motorway.
“Risland’s success shows that with low interest rates, which are likely to get even lower, investors are starting to return to the Auckland new apartment market.”
Evans says terrace homes are becoming the largest growth sector in the market.
“More first home buyers, investors and owner occupiers are choosing a terrace home as they provide better value for money; give residents their own courtyard; and banks are providing better loan to value ratios.
“This is also reflected in general sales times, with terrace houses selling within 40 days, compared with 47 days for apartments.”
New developments coming to the market, such as Kenderdine Square in Papatoetoe, are mixing apartments and terrace homes.
This KiwiBuild project will offer 42 affordable dwellings only 400m from the train station and Papatoetoe village, which has infrastructure improvements underway along with Panuku’s transformation project.
Developers are also building affordable open-market homes for first home buyers who don’t qualify under current KiwiBuild criteria.
The newly launched Y-2 Terraces at Crown Lynn Yards, on the old Crown Lynn factory site in New Lynn, will comprise two, three and four-bedroom terrace homes priced from $643,000.
Evans says current trends suggest these new projects will be well received by the market.
“Our survey shows all the best-selling developments were in the suburbs, affordably priced and close to amenity.
“Both Kenderdine Square and Crown Lynn Yards tick all of these boxes, making them highly attractive propositions for first home buyers and investors.”