As the saying goes, ‘what goes around, comes around’.
Such is the case of the humble townhouse in Australia. In the latter half of 2016 the townhouse experienced a resurgence, with this typology quickly becoming the dwelling of choice for off the plan purchasers disillusioned by the oversupplied apartment market and for developers looking to mitigate risk.
According to research think tank and residential marketing agent, RPM Real Estate, demand for medium density dwellings (including townhouses) has surged over the last four years, culminating in a near record of 33,183 new semi-detached, row or terrace house approvals nationally during the twelve months to October 2016.
This represents solid growth (of almost 7 per cent) for townhome project approvals during the previous corresponding twelve month period, and a substantial 92 per cent increase on the previous low of 17,287 new semi-detached, row or terrace house approvals in the twelve months to July 2012.
The Ballantyne - Glen Iris“The market has changed,” Marshall White Projects Director Leonard Teplin said, who isn’t alone in predicting 2017 will see developers and buyers alike favour the townhouse.
The New York Times made a similar observation in 1985, when “contemporary townhouse projects” and the associated “concessions to local zoning ordinances” first began to play out:
“Over the last decade, condominiums have been recognised by thousands as attractive alternatives to traditional, single-family detached houses. They have also shed their tacky image as cheap alternatives to ranches and colonials - glorified apartments for people who cannot afford a real house.”
The Ballantyne - Glen IrisSome thirty years on, it seems the market has come full circle, with townhomes (or house and land packages as they’re know offshore) back in vogue due to their affordability and accessibility, and governing bodies, developers and industry players actively developing townhomes over apartments to fill the growing demand.
“As supply outpaces demand and the reality of last year’s foreign investment tax, planning legislation and under valuations set in – developers will increasingly withdraw from the multi-residential market and refocus their attention on an owner-occupier product," Teplin said.
The Ballantyne - Glen Iris“Whilst the revenue from townhouses is less, the cost and time associated with developing them is also less, meaning financing is easier to come by.
“Townhouses will also spend significantly less time on market, with the average project sold out within two to three months, whilst apartment projects typically take longer to reach financial close.”
The Ballantyne - Glen IrisFor instance, The Ballantyne, a 22 townhouse development in Melbourne’s Glen Iris, sold out in just ten weeks. Selling for an average of $1.3 million, the tri-level, three/four bedroom homes outsold all apartment projects within a 2km radius.
The Highbury, West FootscrayAt a more affordable average price, The Highbury, a 49 townhouse development in West Footscray, saw a sale a day, with each of the three/four bedroom attached townhouses selling for $632,500 on average.
“Inundated with news of apartment oversupplies, bubbles and the like, buyers are also favouring townhouses and smaller, boutique developments of 40 apartments or less," Teplin said.
The Highbury, West FootscrayIt is here, at the top end of the apartment market that developers are also reinvesting their focus and tapping into wealthy downsizers and retirees with highly curated, premium offerings of 200sqm or more.
Such is the case with Goldfields’ 525 High Street development and Urban DC’s 308 Carlisle St project, where apartments are being sold for up to $3.4 million.
The Highbury, West Footscray“Boutique development, whether in the form of townhouses or premium high-end apartments will be the preference this year, as buyers become less willing to compromise on inferior layouts, areas and services and seek out properties within the ‘wealth belt’ – for Melbourne this includes Bayside, Boroondara and Stonnington.”
Images courtesy Marshall White Projects