18 Jun 2015
Australian Financial Review
by Larry Schlesinger
A swath of new townhouse projects have hit the east coast market with both local and offshore developers looking to cash in on an emerging sweet spot being driven by downsizing Baby Boomers, aspirational buyers priced out of existing homes and apartment-weary investors.
Official government figures show 30 per cent growth in one and two-storey medium-density housing approvals – townhouses, semi-detached and terraced housing – between 2012 and 2014 with the Housing Industry Association is forecasting further growth in townhouse commencements in 2015.
“In terms of further momentum in 2015, the townhouse market did get off to a good start,” said HIA chief economist Harley Dale. “In the March 2015 quarter approvals for townhouse-type dwellings were running at an annualised level of 26,600.”
That level was 29 per cent higher than the level in the March 2014 quarter, Dr Dale said.
Float candidate Metro Property Development has half a dozen East Coast townhouse projects on its books and more in the pipeline.
“We’re very keen on the townhouse market,” said Metro chief Luke Hartman. “It’s a huge market opportunity because townhouses appeal to three types of buyers: the older person selling out of their home in a good suburb, wanting a smaller home in that same suburb; the aspirational younger buyer who can’t afford a detached, existing home; and some of the more discerning investors.”
Mr Hartman said townhouses were also well supported by local councils, who want a diversity of product in new developments.
Metro has sold out its Abode development of 35 townhouses in Caroline Springs in Melbourne’s western suburbs at an average price of $460,000, well below Melbourne median house price of about $620,000. Another project, the more upmarket Acacia Residences, comprising 12 townhouses in Balwyn in Melbourne’s inner east with an average price of $1.37 million is also sold out.
Entrepreneur Cameron Clarke, whose My Real Estate Mate suite of websites connects developers with potential buyers has just launched an off-the-plan townhouse register, www.townhousedevelopments.com.au, to meet rising demand. He said townhouses now accounted for 60 per cent of all buyer enquiries, up from 20 per cent six months ago. Mr Clarke said a drop in the number of boutique apartment developments available which tend to offer larger, better quality apartments suited to owner occupiers – and a fundamental shift in buyer appetite towards a product with greater space, an outdoor area, better ventilation, storage and natural light was behind the rising demand.
“First-home buyers, influenced by their parents, are also more comfortable buying product with a land component,” he added.
Up to 650 townhouses are proposed for developer Sterling Global’s 19 hectare Huntingdale project in Oakleigh in Melbourne’s South East, which is due to come to market early next year. A two-bedroom plus study townhouse of 100 square metres over two levels with a small courtyard will be priced from around $500,000, half the price of buying an existing home in Oakleigh, and targeted at families and empty nesters.
Another development, Como at Valley Lake by Canopi Homes in Melbourne’s north, is a 42-townhouse development based loosely around European-style lakeside living with prices starting from $595,000 for a 198 square metre townhouse.
“We want to show purchasers they can afford a spacious modem three or four-bedroom home,” said architect Glen Chamberlain, whose firm designed Como.
Melbourne architect Koos De Keijzer, a director at dKO, said townhouses were appealing for a number of reasons including liveability, amenity and affordability.
“The cost of real estate in the middle suburbs is going through the roof. A three bedroom, north-facing townhouse becomes a kind of family proposition. It’s a sweet spot in the market,” Mr De Keijzer said.
“There is a sense of individuality about a townhouse that you don’t get from living in a 55-storey building with 600 apartments.
“You have a front door on the ground floor so owners can say ‘This is my townhouse’.
“There’s also a greater sense of community from townhouses. You can curate different urban neighbourhoods and still get a strong sense of diversity, but what you don’t get is a licorice allsorts of house types [in detached housing estates] where a Tuscan-style home sits next to a modem home that’s next to one done in Federation style.”