Wider residential market starting its recovery

Independent forecasters are typically predicting house prices will rise over the next two years. Early signs of recovery are shown through stronger sales volumes, although prices remain flat. In the short term, price growth has been held back by the large supply of homes currently on the market for sale in most regions.

Interest rates the one to watch

Lower interest rates are boosting confidence in the market and are likely to be the most important driver of the market in the short-term. At a bigger picture level, risks around tariffs and global trade have added uncertainty to the market.

Inside the townhouse buyer mindset

Bayleys’ survey of buyers shows affordability and low maintenance are key drivers for buyers considering townhouses. Buyers are however typically concerned about disruptions from neighbours, constrained space, and insufficient parking. Interior cooling / ventiliation and charging for electric vehicles are expected to become higher priority features in coming years.

Next cycle, new priorities

Developer sentiment is pointing towards the start of a new development cycle with many planning new projects. The next cycle is likely to see some developers pivot away from affordable product and focus more on higher end product. This will likely see a shift from 3-level to 2-level product, more spacious designs, and higher-end finishes.

Standing out in a crowded market

With a strong supply of townhouses for sale in some areas, some developers are cutting through the noise by offering something different. Examples include high-spec accessible homes aimed at younger downsizers, compact standalone townhouses for those wanting their own patch of land, and charming character-filled options appealing to buyers after a cosy and unique space.

Expanding the footprint

Off-the-plan sales rates vary across regions. Sales have been strong in Queenstown, moderate in Christchurch and sluggish in Auckland. In parallel, townhouse developments are now emerging in areas where they have previously been rare, including New Plymouth and Dunedin.