CoreLogic chief property economist Kelvin Davidson explores the driving forces behind New Zealand’s decade-long house-building boom.
It’s been common over the past few years for analysts and commentators to focus on terraced or semi-detached townhouses from the perspective of sales activity or new dwelling consents.
That’s understandable given that townhouses have recently accounted for around 45% of all new dwelling consents across the country, compared to just 6% back in 2012.
However, new data from CoreLogic’s Market Trends dataset shows the growing importance of townhouses/flats and how this has changed over time in various parts of New Zealand.
Starting with the national picture, back in 1984, stand-alone houses accounted for 80% of all dwellings in New Zealand, but that’s now drifted down to 75%.
On the flipside, the reduced share for houses has been mirrored by a rise for apartments and lifestyle properties and, in fact, the townhouse and flats category was 13% in 1984 — and still sits at that figure today.
The national data also masks interesting trends at regional level. Across the three largest centres (Wellington covers the City, Porirua, Lower Hutt, and Upper Hutt), the townhouse category has been on a clear rising trend for a number of years now, especially in Auckland from around 2016 onwards. This stems from the Unitary Plan and the shift to more intensified housing on existing brownfields land.
Christchurch still has a higher share of townhouses (nearly 24%) than Auckland (16%), but the latter’s growth in the past seven to eight years has been more significant.
Of the 39,600 townhouses built across New Zealand since 2016, nearly 25,000 have been in Auckland, or approximately 63% of the growth. For comparison, Auckland has about 38% of the national stock of this type of property.
Where townhouse stock has surged the most
CoreLogic’s Market Trends data shows that the stock of townhouses has risen by roughly 50% or more over the period since 2016 in Rodney, Papakura, Manukau and Waitakere.
But given the smaller size of the townhouse market in Rodney, the biggest contributions to the overall growth across Auckland have, in fact, been in Waitakere (33%) — which includes areas such as Hobsonville — as well as Manukau (24%), and Auckland City (19%).
It’s always a little difficult to disentangle supply from demand as the most important driver for the rise of townhouses — 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 but, certainly, buyers can access at a lower price point than other dwelling types. For example, the latest median value for Auckland flats and townhouses is around $775,000, versus the figure for houses of about $1.12 million.
Overall, it’s clear that townhouses are now a more prominent feature of New Zealand’s housing market, especially in the largest cities.
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.
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.
