New Zealand’s new build townhouse market in 60 seconds

Biggest trends

Wider residential market starting its recovery

Independent forecasters are typically predicting house prices will rise over the next two years. Migration gains and constrained housing supply are likely to continue to drive long-term price growth. In the short-term, price growth has been constrained by the impact of high supply of homes on the market for sale.

Interest rates the one to watch

The Reserve Bank has recently lowered interest rates, with further reductions anticipated over time. Interest rates remain a key pressure point for buyers so the future pathway for rates will likely be the main influence on house prices in the short-term.

Flight to quality

During the prior cycle, developers primarily focused on affordable product. Buyers are however becoming more discerning, with a clear preference towards higher quality developments, such as those within higher amenity neighbourhoods, more functional layouts (including larger homes) and higher specifications.

Outlook for the market

New housing cycle on the horizon

Sentiment amongst developers suggests a new development cycle is approaching in response to the expected recovery of the residential market. Some developers are offering stronger incentives on existing inventory to free up capital for their next projects.

Shift towards higher specifications

The specification for new build townhouse has become reasonably standardised. Some developers are pivoting to higher specifications and/or additional features. Examples include provision of electrical vehicle charging and more optionality for heat pumps. Larger developments are also typically implementing stricter controls through design guidelines and enduring resident societies.

Sales rate picking up

Off-the-plan sales are improving across the market. Developments in prime locations, especially those with standout features and strong alignment with local demographics, have stronger performance. Some product typologies remain harder to sell, such as small two bedroom homes without dedicated parking.