Too many developers don’t care enough about what their end-buyers want, and it shows.
With off-plan sales tough to come by right now, it’s easy to blame the problem on high stock levels. What can you do when buyers are spoilt for choice, and standalone do-ups are back in reach of first homebuyers?
There are pockets of over-supply of commoditised townhouses, but the real issue behind slow off-plan sales isn’t oversupply.
The problem is that we’re not building enough of the homes people want to live in.
The market opportunity for quality new build / off-plan homes is significant.
To help developers understand exactly what buyers are looking for, Squirrel is conducting new research through leading insights agency TRA into what matters most important to future buyers when they are looking for their homes.
Initial findings show that 89% of prospective buyers would consider purchasing a finished new build, 78% an off-plan standalone home, and 58% an off-plan townhouse.
So, the market’s definitely there.
But to succeed as a developer and sell properties, quality design—and getting your product-market fit right—is critical.
Some developers get the importance of building for your market, and as a result, do extremely well.
On the single-house build side of things, for example, I think we’ve pretty much nailed it. There are plenty of group builders who are experts at delivering a great product that people love.
Some townhouse developers get it, too.
But so many of the projects we’re seeing in the high-density space (i.e. townhouses and apartments), especially in Auckland, fall woefully short.
Where are Kiwi developers missing the mark?
A lack of consideration around how people want (and don’t want) to live
Let’s use a two-bedroom townhouse as the example.
When you get it right, a good two-bedroom townhouse will have wide appeal—SINKS, DINKs, young families with one kid, or downsizers. Combined, that’s a big market.
But the key to attracting buyers is that they have to want to live in the house. With high house prices, it’s not a short-term stepping stone.
These days, there’s a solid chance at least one person in the household works from home regularly. Assuming they’re using both bedrooms as bedrooms, is there a cubby or some other space for a desk? Does it have a window with a pleasant outlook, or are they just tucked away somewhere staring at a wall?
If you want to appeal to older buyers, is there a toilet downstairs so they don’t have to traipse up and down every time they need the bathroom? And if there is a toilet downstairs, is it right next to the lounge where people can hear everything through the walls?
Outdoor spaces are just as important.
At the most basic level, having a bit of greenery to look out on makes people feel good. It brings in natural light and creates a sense of openness and indoor-outdoor flow. If you’ve got a dog (which roughly 1 in 3 of us do), having a patch of grass out the back—even a small one—for them to do their business on is a non-negotiable.
Things like the height of your ceilings can also make a huge difference in terms of how prospective buyers experience the home. In a small townhouse, going taller than the standard 2.4m ceiling height can bring in a whole lot of extra light and make it feel more spacious.
Building homes that people actually want to buy means you have to to be thinking about all these little details.
A lack of garage or carpark
A few years ago, the central government removed minimum on-site car parking requirements for new developments, based on the (deeply flawed) argument that people are becoming less reliant on cars.
Almost immediately, the market was flooded with townhouses and apartments without carparks or garages. But for developers, this is a classic case of “just because you can, doesn’t mean you should." Sure, it’s cheaper—and means you can cram more units onto the site—but who’s the target market for a home without a carpark?
It’s not a solution for young families, who need a car to get their kids to school and weekend sports. It’s not a solution for professionals who rely on a car to get to work or visit their parents down country. It’s not for buyers looking for a weekday bolt-hole in the city so they can avoid long commutes from their main house out-of-town.
There are very few people who don’t need a car.
So, best-case scenario, you skip the parking and then end up with streets crammed with cars on grass verges. Worst case scenario—if you’re building on a main road where on-street parking is at a premium (or non-existent)—you’ve just wiped out a huge part of your potential market altogether.
Some investors might not care about a lack of carparking if all they’re worried about is rental yield. But the savvy ones will be thinking ahead to what happens when they go to sell the property in 5-10 years’ time and who their resale market’s going to be.
A lack of storage
Developments with no parking, or even with outdoor parking/carports, often also have issues with a lack of practical storage.
Beyond just being a place to park your car, many people think of a garage as an extension of the home. It’s a place where you can set up a home gym, store all your extra stuff, or hang your laundry out to dry on rainy days.
So, where does all that extra stuff go if you don't have a garage? Is there an extra bedroom for the overflow? Do you have plenty of cupboards? Ceiling storage? Or a covered outdoor space where people can park their wet bikes?
A lack of privacy
Privacy—and more specifically inadequate soundproofing—is one of the biggest objections to high density living. Just because someone’s okay sharing a wall with their neighbours doesn’t mean they want to be able to hear their every movement (or vice versa).
Gib inter-tenancy walls are usually the preferred option for developers, simply because they’re cheaper. But while concrete inter-tenancy systems might cost more, the added benefits—i.e. next to no noise transfer and significantly improved fire safety protection—are well worth thinking about if you want to stand out to potential buyers.
Then, doing what you can to limit noise transfer in outdoor spaces is just as important. What happens when everyone’s got their ranch slider open on a hot summer day? Have you thought about how to prevent noise transfer between neighbouring properties?
A recessed porch can make a big difference to the acoustics when it comes to indoor-outdoor flow, but it’s not something we see in a lot of in developments.
The moral of the story?
Way too often, it feels like the name of the game is simply to build everything as cheaply and quickly as possible (and cram in as many units in as you can). If that’s the case, you’re headed for trouble.
Being cost conscious is important—obviously—but good design doesn’t have to cost the earth.
And more importantly, how do you get it right?
Many Kiwi developers, particularly townhouse developers, could learn from Johnny Ive.
The man—best known for his 20+ year stint as Chief Design Officer at Apple (yep, that Apple)—basically wrote the playbook on the importance of intentional, functional, human-centred design when it comes to selling product.
His philosophy is best summed up in this quote:
We’re surrounded by anonymous, poorly made objects. It’s tempting to think it’s because the people who use them don’t care—just like the people who make them. But what we’ve shown is that people do care. It’s not just about aesthetics. They care about things that are thoughtfully conceived and well-made…. Our success [at Apple] is a victory for purity, integrity—for giving a damn.
New Zealand’s development market is a world away from Silicon Valley, but the same principles still apply.
Good design is critical if you want something to sell.
Full insights from our research with TRA will be published in mid-July.