Unpacking New Zealand’s Townhouse Boom: Key Insights

Discover the factors driving New Zealand's townhouse surge, from urbanization to policy changes, as new data reveals a dramatic shift.

New Zealand is currently experiencing a remarkable townhouse construction surge, as revealed by the latest data from CoreLogic. This category, which constituted a mere 6% of all new dwelling consents back in 2012, has now skyrocketed to an impressive 45%. But what exactly is fueling this unprecedented boom?

Unpacking New Zealand's Townhouse Boom: Key Insights

A pivotal factor in this phenomenon is, unsurprisingly, price. To illustrate, the average cost of a townhouse reveals some intriguing insights: CoreLogic's recent median value for Auckland flats and townhouses hovers around $775,000, while the figure for standalone houses is approximately $1.12 million. This translates to a staggering difference of $345,000, or a notable 30% disparity.

Since 2016, New Zealand has witnessed the construction of approximately 39,600 townhouses. A significant portion of this growth, nearly 25,000 units, has occurred in Auckland, accounting for about 63% of the national increase. Currently, Auckland boasts around 38% of the country’s total townhouse inventory. A contributing factor to this surge is the city’s unitary plan, which delineates permissible construction areas and promotes intensified housing on previously developed land.

Data from the Ministry of Housing and Urban Development indicates that between January 2020 and May 2024, a total of 11,406 new public homes (across all types) were constructed. Of these, 9,520 were developed under the auspices of Kāinga Ora, with the remainder being the handiwork of community housing providers.

In the same timeframe, national townhouse stocks—encompassing both Kāinga Ora and community housing properties—have expanded by 27,051 units, marking a 13.4% increase to a total of 228,420, according to CoreLogic data.

Over the past eight years, the stock of townhouses has surged by approximately 50% or more in regions such as Rodney, Papakura, Manukau, and Waitakere. However, it is worth noting that, due to the relatively smaller townhouse market in Rodney, Waitakere has emerged as the largest contributor to overall growth in Auckland, boasting a remarkable 33% increase in townhouse numbers.

In the southern region, Christchurch has seen a 15.5% increase in townhouses, bringing the total to 37,209 since January 2020. Townhouses now constitute 24% of the city’s housing stock. Meanwhile, Wellington's townhouse inventory has grown by 730 units (5%), reaching a total of 14,285 between January 2020 and last month.

However, not every region is basking in the glow of townhouse growth. In fact, the South Island’s Waitaki District has experienced the most significant decline, with numbers plummeting from 490 to 360 units—a staggering drop of 26.5% over the past four-and-a-half years.

In summary, while New Zealand's townhouse boom paints a picture of rapid growth and opportunity, it also highlights the disparities that exist across different regions, reminding us that not all areas are riding the wave of this construction frenzy.