The Kiwi quarter acre dream is looking like it will remain just that, a dream, for many new home buyers in New Zealand. With house prices continuing to rise, downsizing your expectations of the type and size of the property you would like to purchase is completely normal. That’s why many first home buyers are now aiming to purchase an apartment.
Prime Minister Suggests First Home Buyers Buy An Apartment
With house prices becoming unreachable for many, it seems that even the Prime Minister is able to find a way to make homes more affordable, other than to suggest not buying one! Last year John Key suggested that first time buyers aim to purchase an apartment as one way of entering the property market.
With Auckland property investor and commentator Ollie Newland agreed that they were a great price and affordable if due diligence was done saying, Anything’s better than floating round paying rent.
January 2015 saw the average house price reach over $700,000 in Auckland, putting it well above recommended income to mortgage ratios stated by banks. So with two bedroomed apartments in central Auckland selling for around $300,000, are apartments the new quarter acre dream? It seems so, with some new apartment complexes selling out of space even before they are completely built!
Freehold Apartments Better Deal Than Leasehold
So when choosing your new apartment, there are some factors to consider. Firstly, find out if it is freehold (meaning the land it is on is owned by the Body Corporate or you) or leasehold (where the land is owned by someone else). If it is leasehold, you will be responsible for paying the owner a yearly fee to use their land and when the leasehold price goes up, the value of your apartment can go down!
Body Corporate fees are also required to be paid by apartment owners each year. These fees are used by the management of your apartment complex and go towards such things as maintenance of common areas. Ensure you find out what the cost will be as they can vary from hundreds to thousands of dollars every year!
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