Sky high: Young Kiwis buying apartments and townhouses as quarter-acre dream fades

Auckland issued a record number of planning approvals for apartments, units and townhouses over the past year as our cities build up rather than out. Photo / Michael Craig

New Zealand is in a townhouse and apartment building boom with a record 10,000 of them signed off in the past year, as first-home buyers shun quarter-acre do-ups for new properties.

Building plans for a record 10,000 new apartments and townhouses were approved in the past 12 months as our cities increasingly grow up rather than out.

Almost 10 times as many apartments were signed off compared to the same period eight years ago. Many young Kiwis are choosing compact living options closer to the city.

Yet the craze for apartments and townhouses may also be helping fuel Auckland's current record sale prices.

Developers are now paying big bucks for homes on large blocks that can be demolished to make way for high density homes.

Just last month, a modest Royal Oak home on 828sq m at 11 Crown St sold for $3.025 million - $1.4m above its council valuation.

Ray White Manukau agent and developer Tom Rawson said townhouses and apartments were booming not just for the city lifestyles they bring but because many were new builds.

"We've created a situation where people want to get into a new house or apartment and they don't want to have any maintenance and they want double glazing and insulation - they want the best of everything," he said.

The rise in smaller homes was also being driven by sky-high house prices linked to a national housing shortage.

Auckland's median sale price hit a record high $950,000 in August, the Real Estate Institute said.

To help meet buyer demand and drive prices down, analysts Infometrics estimated Auckland needed another 30,000 homes, and 10,000 were needed across the rest of the country.

Other pundits say even more are needed.

Planners consequently turned to apartments and townhouses. Not only do they tend to be cheaper than traditional homes, but more can be squeezed onto each parcel of land.

Authorities changed Auckland's major planning document - the Unitary Plan - in late 2016 to allow more multi-storey apartments and townhouses in central city suburbs close to public transport networks and shops.

The new focus on building up has come with a change in lifestyles as traditional quarter-acre blocks increasingly disappear across the city.

"We made some very difficult calls, but we made the right calls and that is showing up now in the dwelling consent data," Auckland Council's planning committee chair Chris Darby said of the Unitary Plan changes.

He and James Wilson from property analysts Valocity also tipped their hats to private developers for increasingly building smaller homes that people wanted to live in.

Auckland's Hobsonville Pt, Stonefields and other new developments had not only removed the stigma of "housing intensification", but become a hit with buyers, Wilson said.

The most popular sweet spot with Auckland buyers were terrace and townhouses, ideally 10-15km from the city centre, Pete Evans from Colliers International said.

Inner city apartments could be too cramped, and home and lawn packages on the city fringes could be too far from work and friends, he said.

Rawson said that although first homes used to be "absolute do-ups in the city's back blocks", they were now typically very nice new builds.

New builds came with other advantages, including warrantiesand the knowledge banks were more willing to lend against them, meaning buyers could get away with smaller home loan deposits.

Buyer appetite had sent smaller-scale developers scouring the city for land blocks to convert into small townhouse and unit developments, even as larger developers backed off major downtown apartment complexes due to Covid-19's impacts.

All this meant attitudes to townhouses and apartments were changing quicker than expected, Darby said.

Planners had earlier assumed about 70 per cent of future Aucklanders would want to live in the existing city area - even if it meant being in a smaller dwelling - rather than larger housing in new suburbs on the fringes.

However, building consents had now shown about 80-85 per cent of Aucklanders wanted to live in the existing city area.

"Not only are people wanting to live close to transit, they are hungry for homes that can connect them to employment, education and their friends," Darby said.

Satisfaction in St Mary's Bay

Nadia Greatrex, 33, bought a unit in St Marys Bay so she could keep her inner city lifestyle. Photo / Supplied

Renting in picturesque St Marys Bay, Nadia Greatrex enjoyed a lifestyle that put the city, Westhaven Marina and Ponsonby Rd all within walking distance.

But when New Zealand's record low interest rates helped convince the 33-year-old this year that she could afford to buy a home in Auckland, she immediately began saying goodbye to her old life.

"I was resigned to the fact I would need to not only move out of the city but even out of the city's neighbouring suburbs to find my first home," she said.

The first place she looked at was a two-bedroom unit in Hillsborough.

"It was okay, the location was okay, but I didn't fall in love with it," she said.

In the city many apartments were for sale, but high rise apartment living didn't appeal.

Then Greatrex saw a small unit selling in St Marys Bay, near where she rented.

At 56sq m, it was smaller than the Hillsborough unit and a little older. But it came with two bedrooms, its own deck and outdoor area. Greatrex got excited.

She viewed the property, before being urged by the real estate agent to make a quick offer.

"I thought, 'what have I got to lose'."

Her offer was accepted and she bought the unit for "around $700,000".

It wasn't that much more expensive than in Hillsborough and her weekly home loan repayments are only marginally more than her rent payments.

Best of all, although many of her friends had been forced to move into the suburbs to afford house and land packages, she was still able to live in the neighbourhood she loved.