South Auckland developers face cooling market for townhouses
Developers in South Auckland are increasingly forced to sell townhouses at aggressive discounts as supply significantly outpaces demand. Market conditions have shifted, leaving many infill properties—a result of changes to the city’s unitary plan nearly a decade ago—difficult to move without major price concessions, OneRoof reported.
Ray White AT Realty co-owner Tom Rawson stated that supply in his area currently exceeds buyer demand by a wide margin. Developers are often compelled to use tactics such as $1 reserve auctions to secure a sale. Rawson noted that buyers are using the high volume of similar properties to play developers against one another.
"People are buying a property conditionally and then using that property as an option to purchase," Rawson said. "They are then looking at the other properties because there are so many of them around and going, ‘That’s not too dissimilar to that one; if we can get that one cheaper, then we will let our existing contract fall due to finance.’"
Premium standalone builds drive sales for developers
While generic townhouses struggle, demand remains firm for standalone new builds that offer premium features. Barfoot & Thompson agent Donald Gupta reported that developers who have been "hurt badly" in the last 18 months are now adjusting their strategies to meet buyer expectations.
Gupta recently sold four standalone new builds in a six-home development on Peverill Crescent, Papatoetoe, to first-home buyers within six weeks of listing. These homes, which featured high-end fixtures and spacious layouts, sold for between $850,000 and $930,000.
"If the houses are good and done properly, they’ll sell," Gupta said, emphasizing that buyers are looking for quality, including outdoor space and superior internal fittings. He contrasted this with the difficulty of selling large sections, noting that developers are currently cautious about committing to new projects until market conditions stabilize.
Price adjustments and competition in the current market
Harcourts New Age agent Harsh Kathuria confirmed that townhouses and duplexes are the primary segments struggling in the current environment. At a recent auction on Massey Road, Māngere, a developer sold a standalone new build for $625,000 at a $1 reserve to avoid lender intervention. Two other properties at the same auction sold shortly after as bargain-hunting buyers arrived.
For sellers of more traditional homes, Kathuria advises a realistic approach to pricing. He recently sold a four-bedroom home on Kira Road, Flat Bush, for $1.43 million—well above its RV—after attracting 13 bidders and 80 families to open homes.
"If you are looking for a kamikaze price, forget about it; this is not your market," Kathuria said. "I’m telling my sellers – forget about what’s sold, that isn’t relevant anymore. Let’s see what our competition is, what’s on the market right now?"
Market trends for buyers and sellers
- Did you know? In Papatoetoe, development sites are still in demand, but only if they are situated outside flood zones and remain free of water service constraints.
- Pro tip: Real estate agents suggest that buyers who have been searching for six months or more are significantly more likely to make a serious offer than those who have just entered the market.
Questions about South Auckland property trends
Why are townhouses harder to sell than standalone homes?
According to local agents, townhouses have become a "dime-a-dozen" commodity in South Auckland due to an oversupply caused by long-term planning changes. Buyers now have extensive choice, allowing them to prioritize standalone properties with higher-end finishes over generic infill developments.
Are all property types in South Auckland struggling?
No. While townhouses and duplexes face a supply glut, well-maintained brick and tile homes continue to attract first-home buyers. For example, agents recently sold such properties in Papatoetoe and Clendon Park for $735,000 and $745,000 respectively.
How are developers reacting to the current market pressure?
Many developers are becoming more cautious, avoiding large sections while focusing on building high-quality, standalone homes that meet specific buyer preferences like spacious bedrooms and bathrooms. Those in financial distress are increasingly turning to $1 reserve auctions to liquidate stock before lenders intervene.
Worth a look