Did you know that Auckland has hit a record high on the Rider Levett Bucknall crane index? There are 47 cranes on the Auckland skyline, 29 of which are working on residential projects – many are working on new apartment buildings to meet what the RLB report calls “growing demand” over the past 12 months.

Who’s going to be buying all these brand new apartments? Investors, definitely. But also a growing number of owner-occupiers and firsthome buyers.

Last month Prime Minister John Key had some advice for first-home buyers in Auckland: search Trade Me for properties priced below $500,000, “and you’ll find quite a few.”

This recommendation was met with derision and described as “offensive” and “insulting” by his detractors. Journalists were quick to do their own searches and show the dearth of decent listings – with most dismissing the many apartments as an unappealing option.

First Home Choice

However, I believe apartments can be a great choice for first-home buyers who really want to live in Auckland. Obviously I’m biased, but the fact remains that apartments stand out as one of the only remaining affordable options.

Look at the possibilities with an apartment:

▶ When I searched, there were 449 Auckland apartments on Trade Me for under $550,000 and 394 for under $500,000.

▶ When you run the numbers, it’s often possible to own an apartment for a similar cost to renting on current interest rates.

▶ When the value rises, you can leverage your apartment equity to help buy a house, or tenant it and rent a house yourself.

▶ Apartments are usually close to transport links, reducing your travel costs and time, particularly when compared with a similarly-priced house in an outer Auckland suburb like Franklin or Rodney.

▶ If you buy for under $550,000, you may be eligible for a HomeStart grant of up to $10,000.

▶ Buying off the plans means LVR restrictions don’t apply and you can get a higher HomeStart grant of up to $20,000.

▶ No maintenance, no gardening, no lawn to mow, lock up and leave, and often safer for those living alone.

Certainly risks are attached to apartments: you wouldn’t want to buy a leaker or a leasehold apartment unless you were an expert; you need to budget for annual body corporate fees; you are less likely to see capital gains on par with a standalone house (though apartments have performed outstandingly in this department over the past five years).

Not For All

Apartments aren’t for everyone, but they are part of the deal when it comes to major international cities a club Auckland has either already joined, or is well on its way to joining, depending on your opinion.

If you were trying to buy in New York or London, you’d be delighted if you could afford an apartment and you wouldn’t dream of being able to buy a standalone house. Higher-density living is part of the trade-off that helps create a bustling city with full-time nightlife, non-stop events and a spectrum of diversity.

There are plenty of people arguing that houses shouldn’t be so expensive in Auckland and that everyone has a right to buy a home for their family.

That may be so, but it’s hard to see how to fix that in time for the current crop of first-home buyers to get a foot on the housing ladder. Faced with the market we have right now, and the situation confronting first-home buyers who want to live in Auckland, apartments are a sensible, realistic prospect with many potential upsides.