Auckland’s latest plan change is out and about, quietly rewriting the rules for anyone thinking about building, developing, or growing a portfolio. So I sat down with Peter Fa’afiu from Navigator, who consults to developers, to get his honest read on it.
Way Too Many Townhouses
First question — what’s the point of building more townhouses right now?
Peter: Honestly, you’re struggling to sell them. Across Auckland they’re sitting on the market 120 to 130 days on average. A lot of it comes down to location — anything built more than 1.3km from a train station or public transport is going to struggle.
So if you are building townhouses, proximity to transport isn’t optional anymore. It could be the difference between selling and sitting.
What Auckland’s Actually Short Of
If not more two-bed townhouses, then what?
Peter’s list: single-level homes across the board (not just for retirees — plenty of people simply aren’t moving into retirement villages), accessible homes (16% of New Zealanders live with a disability, but only 2% of housing stock suits them — wider doors, wider hallways, access platforms), and larger four and five-bedroom homes.
That last one’s easy to miss if you’re not looking for it. We’re both seeing families — Samoan, Tongan, Lebanese households in particular — buying three townhouses in a row specifically to keep the wider family together. It’s the same pattern that’s played out in Australia. So bigger homes could be more desirable.
Don’t Celebrate Someone Else’s Plan Change
Here’s a genuinely useful bit of scepticism from Peter: a plan change doesn’t mean anything is actually getting built.
Large-scale developers are securing plan changes or fast-track approvals and then simply sitting on them — legally, for up to five years — before doing anything at all. So don’t assume supply is coming just because a consent has landed.
The Number Everyone Gets Wrong
One in five two-bedroom, two-level townhouses in Auckland are currently selling at a loss. Which is a strange thing to hear, because the usual advice to investors is “don’t buy new” — you miss out on depreciation, you pay a premium. But right now it is possible to buy below cost.
Peter’s bigger warning, though, is about how people calculate their own numbers when they’re sitting on land and thinking about developing it themselves. The mistake: using what you paid for the property years ago as your “cost,” rather than what you could sell it for today. If your section is worth a million dollars now, that’s your real starting cost — not the $150,000 you paid two decades ago. Skip that step, and the maths on paper looks a lot more attractive than it actually is.
Banks Are Surprisingly Keen
Banks are currently open to lending on build-to-rent and small-scale development, even with the market flat. We have had deals go through recently for five townhouses in one hit — projects that previously would’ve been shunted straight to a bank’s commercial property finance unit, with all the extra overlays that comes with. Now, provided the numbers and income support it, there’s real flexibility.
It’s an unusual position to be in — lending easing up at exactly the point the economy’s been flat for a while. Normally that’s when the doors close, not open.
Relief for costs?
Build costs are still high, though supply chains for materials have eased a little recently — which is really just good policy doing its job. Fast-track consenting, opened-up supply chains, and reduced regulatory friction have coincided with rents and house prices easing in the main centres. Good supply, paired with sensible policy, makes housing more affordable.
