Understanding the surge in townhouses
CoreLogic chief property economist Kelvin Davidson (pictured above) delved into the factors behind New Zealand’s decade-long house-building boom, highlighting the significant growth in townhouse construction.
Townhouses lead housing growth
Townhouses have become a major component of New Zealand’s housing market, now accounting for 45% of all new dwelling consents, a dramatic increase from just 6% in 2012.
“Townhouses are now a more prominent feature of NZ’s housing market, especially in the largest cities,” Davidson said.
Auckland’s townhouse surge
Since 2016, nearly 25,000 of the 39,600 townhouses built across New Zealand have been in Auckland, making up approximately 63% of the growth.
Key sub-markets like Waitakere and Manukau have seen townhouse stock increase by more than 50%.
“Given they use land well and can be built close to existing infrastructure such as transport links, they provide a different and cheaper option for a wider range of property buyers,” Davidson said.
Historical housing trends
In the early 1980s, standalone houses comprised 80% of all dwellings in NZ, but this figure has since dropped to 75%.
The share of townhouses and flats has remained at 13% since 1984, though regional trends show significant changes, particularly in Auckland.
Regional differences in townhouse growth
Christchurch has a higher share of townhouses (nearly 24%) compared to Auckland (16%), but Auckland’s growth has been more significant in recent years.
Davidson attributed this to the Unitary Plan and the shift towards more intensified housing on existing brownfields land from around 2016 onwards.
Demand and affordability
Townhouses offer a lower price point compared to other dwelling types, making them an attractive option for buyers.
The median value for Auckland flats and townhouses is around $775,000, significantly lower than the $1.12 million for houses.
“Did tastes change and developers respond, or have buyers just had to purchase what was available? In reality, it’s likely to be a bit of both,” Davidson said.
CoreLogic on future outlook
Townhouses are expected to continue playing a crucial role in NZ’s housing market, especially with government housing supply rule changes aimed at maintaining the townhouse building pipeline.
“The obvious aim would be that the government’s current housing supply rule changes – ‘Going for Housing Growth’ – will prove effective in keeping the townhouse building pipeline strong over the medium term, alongside general growth in all dwelling types,” Davidson said.
Read the CoreLogic NZ media release here.
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