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Reflecting an increasing shift in home buying preferences in Melbourne, townhouse construction approvals are increasing at a faster rate than houses in growth suburbs.

ABS (Australian Bureau of Statistic of Statistics) figures show there is a 26% increase in townhouse approvals over and above last years figure, for Melbourne’s growth areas. 1834 building approvals were made.

However, in the same period house building approvals in the growth areas increased by only 6%, to 12,498.
There are several reasons behind the increase in townhouses in the outer suburbs. Although medium density development is increasingly encouraged in Melbourne inner-city locations have more restrictions, which pushes many townhouse developments further out.

A surging population wants more choice

Danni Addison, Victorian chief executive of the Urban Development Institute of Australia says Melbourne’s outer growth suburbs present developers with more options to produce the range of dwelling choices our burgeoning population needs and aspires to. According to Addison, “Townhouses located in Melbourne’s middle and outer regions are performing very well, with definite consumer demand there, which is the second factor driving growth”.

Addison says buyers are moving to townhouses because new, low-maintenance homes are what many people want, and the rising popularity of townhouses is expected to continue. Ms. Addison claimed “In coming years dwellings other than stand alone houses will be the majority of commencements across Victoria”.

Surging population growth is underwriting the demand, in a market dominated by local owner occupiers.

ABS figures for 2016 showed Melbourne growth suburb South Morang is the fastest expanding suburb in the nation, while Craigieburn, Cranbourne East and Point Cook are also in the national top five.
And the locations are proving to be good investments. Homes in South Morang and Craigieburn in the northern growth corridor actually outperformed the Melbourne median in home value gains across 2016 (CoreLogic).

Many priced out by house and land cost

Jon Atchison, Director at development group Wolfdene said they had been adding more townhouses to house and land sites. “Several years ago when we first started doing it, home buyers were still getting around the idea of townhouse living in urban growth areas, but now it’s far more accepted”.
Buyers can be priced out of house and land packages in places like Point Cook. “Our Saratoga townhouses were very popular aspect of the development there” according to Atchison, “with many Melbourne house and land packages breaking the $500,000 mark there’s a vacuum for buyers with $300,000 to $400,000 budgets that can be filled with medium-size products’.

Mr. Atchison said as land price growth keeps heading skyward and with council density requirements bringing the size of allotments down for houses, even at the urban fringe of the city, townhouses will increasingly aim to compete with detached homes. The result will be rising quality of the builds, the fixtures and fittings and architectural style.