A study into the demand for apartments in central Auckland
- Shanghai University of Finance and Economics
- Publication Type:
- Conference Proceeding
- The 13th Asian Real Estate Society (AsRES) Annual Meeting and International Conference Proceedings, 2008, pp. 30 - 39
- Issue Date:
Property developers have been reported as 'shunning Auckland's inner city marketâ in 2007 reducing their investments from around 2000 units (worth $600 million) in 2006 to around 150 units (worth $45 million) in 2008 (Gibson, 2007). The sale activities of apartments in the Auckland city central have dropped significantly in the first quarter of 2008 compared to the similar period last year. In spite of this however, there are new apartments under constructing or on the drawing board. The Reserve Bank of New Zealand (RBNZ) has raised its benchmark interest rate four times between March and July 2007 to 8.25, and is still under pressure to increase this further. What then is the trend of apartment prices in Auckland central city and whether apartments are worthy of investment in the near future? In order to answer these questions, this paper aims at studying the main determinants for the demand of apartments in the near future using the statistical method, analysing collected sales data. A total of 4,460 validated sale transactions of inner-city apartments in Auckland have been analysed in this study. A key finding of the study is that the number of international students and the net migration of residents are two factors that have an immediate impact on the sales of apartment in the Aucklandâs inner city. The main demand for apartments, especially those with an internal floor area of less than 50 square meters, are from the international students who would mainly rent the apartments, fuelling investor demands in turn. A consistent policy for overseas students to accommodate demand for apartments is thus an important ingredient in stabilising prices of apartment in Auckland.
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