The number of apartments being built in Auckland is likely to slow down soon, the Auckland Property Investors Association warns, as the market flattens out for the next few years.
A report from commercial real estate group CBRE said while the number of apartments being built looks to be increasing year-on-year, the boom will likely not last long.
About 2700 new apartments will be completed in Auckland this year, up from 1650 last year, and about 3300 should be completed next year.
"Despite strong growth in the level of building consents to date, it appears that changes in the development market environment mean that continued growth is not sustainable," the report says.
The report said there have been much fewer new projects launched within the past year or so, and that "there is serious potential for the pipeline to shrink further unless there is a material increase in new project launches."
Speaking this morning to TVNZ 1's Breakfast, APIA's President Andrew Bruce said the market is "cyclical" and that he wouldn't be surprised to see another 2-3 years of a flat market.
"In terms of building these larger-scale apartments, they can take four, five, six years from the time you've actually got the land under contract, through to when you actually get your resource consents, you design it up, you get your feasibilities and then you try to get your pre-sales," he said.
"Generally the property market works on about 7-10 year cycles so I wouldn't at all be surprised to see a flat market for the next 2-3 years.
"As this report has said, we're not likely to see too many more new big apartment complexes come on stream in this part of the cycle."
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