Drive around almost any New Zealand suburb and you'll see clusters of identical townhouses at various stages of construction. Are there too many? And are they lowering the value of the homes that belong to the rest of us? By Ed McKnight
Some new townhouses are sitting unsold so long they can hardly be classed as “new builds” by the time a buyer arrives.
A surprising problem to have in a country that spent years saying there weren’t enough homes and pointing at a housing crisis.
But, it raises a new, uncomfortable question: Did we build too many townhouses?
Yes, there are a lot of properties on the market
There are currently almost 14,000 properties for sale in Auckland alone. The last time we had this many, it was 2015 and we were still in the wake of the 2008 Global Financial Crisis.
What’s changed over that time is the nature of properties we’re building and buying. In 2011, almost 90% of new dwelling consents were for the construction of a standard, standalone house, according to Stats NZ.
Today, we are basically building as many townhouses as we are new houses.
Suburban streets, once dominated by bungalows, villas and their more modern equivalents, now sport clusters of identical, conjoined two- and three-storey townhouses. And when you drive past yet another block of these going up, it's fair to ask: who is actually buying these? And surely, if they're everywhere, we've built too many?
Is there an oversupply?
Seeing a lot of stock on the market isn't necessarily evidence of an oversupply. And actually, new builds make up only a portion of the homes currently for sale.
There are roughly 35,000 properties currently listed for sale on realestate.co.nz. About 8000 of those are new builds.
But even if you strip every new build off the market, every new house, every new townhouse, New Zealand would still have just as many properties for sale as it did during the recent post-Covid property price downturn.
You could take every new build off the market and still have what's considered an elevated level of supply. Then again, it's possible that all the townhouse sales are seeing some stand-alone homes linger for longer on the market, as people opt for the relatively cheaper choice now readily available, with less land but a brand new kitchen.
New Zealand's changing streets
Another part of the reason people think we've built too many townhouses is that their construction is just so widely visible.
A townhouse development is loud and obvious. Scaffolding goes up. Diggers turn up. A row of new builds appears on a street where one old house stood for decades, and the process becomes an ongoing source of gossip among the neighbours.
What you can’t see are the thousands of lives taking place inside these homes. Or, the mortgages getting paid every fortnight. Some of those living in these homes – young couples, small families, single people, older people, middle-aged divorcees "starting over" – couldn't have afforded a mortgage on a free-standing house. They'd still be renting if it weren't for the townhouse option.
Because, according to REINZ, the median sale price for a townhouse in Auckland in June 2026 was $750,000; while the median sale price of a house was $1,050,000.
That $300,000 price disparity means your deposit could be $60,000 smaller and your mortgage repayments substantially lower. Townhouses made the Kiwi dream of home ownership a reality for many.
But hang on, Christchurch bucks the trend
Just when it looks like a townhouse surplus might be a key factor in the stagnant housing market, , Christchurch complicates the argument.
Because in Christchurch, house prices have kept rising. The city bucks the almost nationwide trend for a flat housing market. In fact, they recently pushed past their previous peak to sit near record highs.
But townhouses are everywhere in Christchurch – about one in four homes there are townhouses. So if townhouses were crashing property prices, you would expect property prices to be falling there too.
Christchurch doesn’t prove that townhouses push prices up (if that were the case the property market in most New Zealand cities would be booming.) But it does show that more townhouses does not automatically mean falling house prices.
Can there ever really be an oversupply?
The late Sir Bob Jones, one of the country's best-known property investors, reckoned there's no such thing as an oversupply of property.
His logic was that when prices are high, not many people buy. When prices fall, more people can afford to buy, so they do.
So when you see homes sitting there unsold, it doesn't mean we built too many.
It means the price is too high. It’s not oversupply. It’s oversupply at that price.
The property waiting four years to sell
About four years ago I looked at a townhouse that was for sale. I just checked it last week. It's still online. It still hasn't sold.
But as Sir Bob told us, that property could sell tomorrow.
All it would take is for the developer to drop the price to something that buyers are actually willing to pay.
They won't. Maybe they paid too much for the land. Maybe their build costs blew out. Maybe they're just holding on, hoping the market turns.
But the home isn't unsellable. It's unsellable at that price.
Did we build too many? In a generally over-saturated housing market and a nation-wide economic slump, it's hard to say. From the perspective of a traditional home owner whose house value has stayed the same for the past five years, maybe we did. From the perspective of the thousands of Kiwis buying their first home – and a brand new one at that – no, we didn't.
Ed McKnight is an Auckland-based economist and property investment advisor.
*The advice in this column is general in nature and should not be read as personalised financial advice.
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