AT AN auction held in inner city Melbourne on Saturday, townhouses were flying off the shelves. And it was largely young locals snapping them up.
Fifty-five townhouses, worth a cumulative $63 million, were sold off-the-plan in just three hours for Glenvill Group’s new YarraBend development, located along the Yarra River in Melbourne, just 6.5km from the CBD.
These townhouses weren’t even meant to go to market yet. Glenvill decided to fast-track its offer of 29 stage one townhouses by almost six months after more than 100 paid expressions of interests were registered by the Glenvill client base. Due to the overwhelming demand, the company also decided to release a further 30 stage two townhouses on Saturday.
This townhouse bonanza represented a 95 per cent clearance rate, blitzing the Melbourne average of 78 per cent over the weekend recorded by Domain.
These sales results go some way to highlighting how in demand townhouses are — and how important it is our state governments promote greater supply — but even more telling is who was buying them.
The buyer profile was mainly young couples and young families, with prices ranging between $770,000 to $1.215 million. And it was also local Melbourne residents who purchased the vast majority (52 of the 55 properties sold). The remaining three were sold to one Tasmanian buyer and two New Zealand families.
Apartment developers and governments releasing land for apartment construction would tell you that building more multi-unit complexes will ease affordability pressures faced by our younger generation. But if apartment prices are dropping in our CBDs nationally as oversupply fears loom, and townhouse sales are going gangbusters, it makes you wonder if we are focusing on building the right type of supply.
THE MISSING MIDDLE
In October, the New South Wales government recognised this, releasing its Medium Density Design Guide to try and encourage the construction of more townhouse and terrace style housing.
NSW Planning Minister Rob Stokes described townhouses and terrace houses in the draft guide as “the missing middle”.
“What we know is that we’re getting a lot of apartments and high-rise units across Sydney, we’re also getting detached housing on the fringes of Sydney,” Mr Stokes told the ABC.
“What we are missing out on though is that human scale of development that typifies so many cities overseas and that really is all about terraces.”
The guide will allow a range of homes — including townhouses, terraces, dual occupancies and manor homes — to be assessed as complying development as long as they meet specific design standards, saving time and money for homeowners.
Complying development is faster than traditional development applications, taking about 22 days compared to 71 days as it meets already agreed stringent standards and local council zoning requirements.
The Medium density housing accounts for just 10 per cent of housing approvals in Sydney, with just 5,390 approved in 2015-16. This is despite there being the potential for almost 280,000 medium density dwellings in Sydney based on current council zoning and planning controls.
Glenvill Sales Manager, Nick Marinakis, said there is still room for both apartment and townhouse development in our capitals, but he also said the supply of inner city apartments may not be meeting the needs of those who need them most for affordability reasons.
“I think apartments still represent a good option for people … but what we are finding is for apartment dwellers, the downsizing or empty-nester market values apartments in the inner suburbs but they have to be very premium and they have to be oversized,” he told news.com.au.
GROWING DEMAND NATIONALLY
Mia Fredrix, real estate agent and director of Cobden & Hayson Drummoyne, recently sold a three-bedroom townhouse in Abbotsford, about 10km west of Sydney’s CBD, for almost $1.5 million prior to its scheduled auction.
She said this is “definitely” a sign of the growing demand she is witnessing for townhouse and terrace style living in Sydney.
“[Townhouses] lend themselves to things like having a courtyard,” she told news.com.au.
“Owners can have an outdoor entertaining space and it makes them more pet-friendly. It is the lifestyle.”
Ms Fredrix said it also wasn’t uncommon for townhouses to sell prior to auction due to the growing demand.
“They are rare. People want them so they are prepared to make attractive offers before it even goes to auction.”
LJ Hooker Head of Research, Mathew Tiller, said demand for townhouses has been rising in the majority of capital cities over the past five years.
“This has been driven by upsizers, such as young families, looking for more space and a yard but due to recent strong price growth can’t afford a house,” he told news.com.au.
“Demand has also come from retires who have always lived in a large house and want to downsize into a home with a garden.”
Townhouses represent “the better of options for a house-dweller versus an apartment,” Mr Marinakis told news.com.au.
NSW may taking a step in the right direction in regards to addressing “the missing middle”, but Mr Tiller said there should be more effort across all levels of government nationally “to ensure we have a diverse mix of new housing”. And Ms Fredrix told news.com.au the same, suggesting that governments have been focusing on apartment supply due to a better return on the land — you can build more apartments on a piece of land compared to townhouses.
Glenvill’s YarraBend is a major urban renewal development which will build more than 2500 new dwellings — a mix of freestanding homes, townhouses and apartments — over an eight-year timeline. Construction on the townhouses will commence in mid 2017 with completion expected in mid 2018.
Written By: Julia Corderoy