Expert talks about the future of housing
The way New Zealanders live is changing, with traditional nuclear families on the decline and both smaller households and intergenerational living on the rise. But just what do these changes mean for the future of Kiwi houses?
Since the 1970s, new houses kept getting larger – from an average of 100sqm to a peak of 200sqm in 2010. That trend has reversed now though, with average floor areas falling to 158sqm in 2019, driven by a fall in the size of standalone houses and the rise of townhouses and retirement units. Factors such as high prices, customer demand, and what developers are choosing to build are putting downward pressure on house sizes, Westpac reported.
“There’s been a huge upswing in the number of townhouses, but it’s a little bit chicken and egg,” says Kelvin Davidson, chief property economist at CoreLogic. “Is that just what developers have built, so that’s what people have to buy? Or is it consumer preference? I think it’s probably a bit of both.”
Read more: Construction costs continue to rise, but peak growth may be nearing – CoreLogic
Demographic factors have a crucial role to play in the type of housing Kiwis need. There’s now more demand for small houses at all stages of life, due to the fall in fertility rate, the drop in marriage rate, and the increase in single-parent families in New Zealand. Kiwis are living longer, too. There has also been a lifestyle shift away from the old quarter-acre paradise with a lawn and a big garden, Westpac reported.
“When it comes to gardening and mowing, people would rather have a small lawn, or even an artificial lawn,” Davidson said. “I don’t know whether this is a choice or just because a garden costs too much – it could be about affordability, or it could be a cultural thing where people would just rather do other things.”
Read next: NZ property market starts to slow down – CoreLogic
But while demographic movements cause slow market shifts, financial pressures force immediate change. Amid the high price of accommodation and the rising cost of living due to inflation, multi-generational households increased 30% between 2006 and 2013, while multi-family and multi-person households have also risen, census data showed.
“People can’t afford a house on their own, so they rent as two couples, or two families, or across the generations,” Davidson said. “In future, it could be that we see more of a divergence in our housing market. Where we previously had a whole lot of three-bedroom houses and everybody lived in them, in the future we’ll see more five-bedroom and more townhouses, and not a whole lot in the middle.”
In planning projects, developers always think about their end customer – and this is more important than ever given the two divergent trends in the market. Their decisions will also be driven by profit, and intensified housing means economies of scale – but it won’t work everywhere, Westpac reported.
“I live in Selwyn and it’s standalone dwellings as far as the eye can see,” Davidson said. “Developers need to take into account planning rules, available plots, profit margins, and future consumer demand. The best type of housing will definitely depend on where you are.”
