Townhouses trump houses

Townhouses are growing in popularity taking 13.8 per cent of total disclosed site sales across Australia in the last financial year, reveals Knight Frank’s latest research report.

The latest Australian Residential Development Review highlights the shift towards medium density development.

In the 2014/15 financial year, just three per cent of sites, by value, were medium density. The following year, this had climbed to 6.3 per cent of total disclosed sales, and 13.8 per cent in 2016/17.

In comparison, low density sites accounted for 13.6 per cent of sales in 2016/17. High density sites made up 72.5 per cent of sales.

Residential development site sales tallied $7.1 billion in the year ending June 2017 across the five major cities, down 24.2 per cent on the previous year.

Michelle Ciesielski, Knight Frank’s head of residential research in Australia says the trend reflects the fact that first-time buyers have been “priced out” of the single dwelling, low density market in Greater Sydney and Greater Melbourne over recent years.

Medium-density development presents “less stringent financing practices by the major lending institutions for developers” she says.

It is also less risky than high-rise construction, as it “allows the staged development to be more controlled” and for the developer to “kick off construction earlier, rather than waiting to achieve a high portion of sales within the residential tower project”.

The medium-density market is being driven by suburban downsizers, Knight Frank’s head of commercial sales, Paul Henley, adds.

These buyers are “looking at a lower-maintenance home in a similar location, close to a familiar community and amenities, or to the CBD”.

Freehold land ownership is also appealing to offshore buyers, particularly those taking advantage of the lower Australian dollar, Henley says.

As more downsizers are drawn to townhouses, Ciesielski says “it’s likely we’ll see more of this type of development in this space over the coming years”.

“Owning a piece of land, although potentially under an owner’s corporation and a traditionally smaller allotment of land than an averaged landed dwelling, is becoming the standard compromise for many Australian families,” Ciesielski concludes.