Renters still dream of quarter-acre living
Townhouses and apartments are more affordable, but most first-home buyers would prefer a standalone house, a Stuff NowNext survey shows. Miriam Bell reports.
There is a disconnect between what first-home buyers can afford to buy and what they want to buy, with a new survey showing most want a standalone house.
House prices have now fallen 16.2% from the late 2021 market peak, according to Real Estate Institute figures, but housing affordability remains stretched and a big concern for most people.
A recent Stuff NowNext survey shows renters, recent migrants and 18- to 24-year-olds are most worried about housing affordability, with 71% of renters saying it is one of the biggest issues their region will face.
Sixty-one per cent of renters in the survey said they want to own a home but cannot afford to buy – and yet 79% of renters said they want to buy a house.
That is more than twice the number who are keen on a townhouse (36%), and significantly more than the 15% who want a unit or the 12% who want an apartment.
Townhouses, units and apartments generally have much cheaper sale prices than houses do. The latest Trade Me Property price index has the national average asking prices for townhouses, units and apartments at $809,100, $556,750, and $714,250 respectively.
In contrast, the national average asking price for three- to four-bedroom houses is $906,750.
Actual sale prices are often well below those asking prices. For example, it is possible to buy townhouses in the $500,000 to $600,000 range in west and south Auckland, Harcourts Property Ventures director Mark Honeybone says.
The lower price point makes these property types a more affordable option for first-time buyers, but the NowNext survey suggests that many are reluctant to consider them.
Sense Partners economist Shamubeel Eaqub says there is a difference between aspirational and affordable, so if people did have unfettered access to money they probably would choose a standalone house on a quarteracre section.
But buying that type of property is simply not realistic for most, and they will turn to more affordable options, he says.
‘‘This is particularly the case in places such as Auckland where lots of new housing stock is medium density, and there is a greater range of options.
‘‘There is demand for this stock. Developers are building townhouses and apartments because people want them and are buying them. If they weren’t, developers wouldn’t be doing it.’’
It is worth noting there is a distinction between terraced housing and townhouses, and apartments, which buyers are more wary of, he says.
‘‘Part of the hesitancy is the legacy of the lower quality apartment builds back in the early 2000s, but the quality of new apartment supply has improved significantly.’’
Medium-density housing options, particularly apartments, also come with density costs, such as more noise, closer proximity to neighbours, and less privacy, Eaqub says.
‘‘But they also tend to be in more central, high-quality amenity locations which are close to transport hubs and schools, so there is a tradeoff at play.
‘‘There is a cultural shift happening, and we’ll see demand for medium-density housing increase as more supply becomes available and the fear of the unknown diminishes.’’
Boutique exception
Squirrel Mortgages founder John Bolton says the disconnect between what first-home buyers want and what they can afford is already much smaller than when he started out in the business.
Fifteen years ago, no first home buyer would even consider an apartment, and most would discount a townhouse, but that has changed as affordability has become more of an issue, he says.
‘‘The disconnect would have been smaller again two years ago when the market was booming. It was crazy, and buyers were desperate to get in, so they were buying anything they could, often regardless of quality.’’
Prices have come a bit back now, but many first-home buyers still gravitate to townhouses because they do not cost as much, he says. ‘‘Apartments are not as popular, partly because there is a lingering stigma around leaky buildings and dodgy body corporates. But also many buyers look at a property purchase as an investment in their future.
‘‘If they are going to be stretching their budget to put more than half their income into a home, then they want to own land and see it increase in value.
‘‘Apartments just don’t tick that box for many people.’’
There is an exception to the rule, as smaller, lower-level boutique apartment buildings that cultivate a community are popular with buyers, Bolton says.
‘‘People don’t want to live in sterile concrete high-rise blocks where the apartments are shoeboxes and largely owned by investors.’’
But as the main centres grow, and medium-density housing options mature to reflect what people want, demand for townhouses and apartments will keep rising, he says.
Big jump in listings
There has also been a big increase in the number of homes for sale over the past year, with the number of properties listed nationwide up by 39.4% annually to 27,732 in January, according to realestate.co.nz.
CoreLogic chief property economist Kelvin Davidson says this increase probably contributes to the fact that more first-home buyers want to buy houses, rather than townhouses or apartments. There was so little stock on the market two years ago that buyer options were limited, but now they have a much greater range of properties to choose from, he says.
‘‘Our most recent first-home buyer report, which was out at the end of last year, shows firsthome buyers’ share of standalone house purchases has gone up.
‘‘They may be looking to buy houses which were out of their range before but are now cheaper, or they may be able to buy a ‘better’ property, and that may be a house, rather than a townhouse.’’
But there is a difference between needs and wants, and, in an economic sense, the gap between them shifts and changes over time, he says.
‘‘There will always be a portion of the public that wants to buy a house with a lawn, but affordability issues mean more people have to look at different property types.
‘‘And tastes are changing, with lifestyle and location becoming more important.
‘‘There is a growing number of people who don’t want to deal with garden maintenance and long commutes.’’
That means city planners and developers need to think carefully about where they put mediumdensity housing if they want to attract buyers, Davidson says.
‘‘You can’t just bung a townhouse development 50km away from Auckland without roads, transport connections and amenities and expect people to flock to it.’’