The property type we can’t get enough of

The property type we can’t get enough of

February 1, 2023 | by DiJones

Townhouses and terraces are in strong demand across Sydney’s Upper North Shore, with record highs still being achieved for luxury townhomes even in today’s generally flatter market conditions.

Who’s buying townhouses on Sydney’s Upper North Shore?

One group of buyers is primarily behind the strong demand for townhouses and terraces: downsizers. In fact, downsizers are now one of the most important buyer segments in our area and are helping shape the property market here on the Upper North Shore.

It’s a trend we’re seeing across the country as statistics from Digital Finance Analytics reveal around 1.6 million Australian households are planning to downsize over the next five years. Of these people, 70% are aged between 60 and 70, and the remainder are over 70, but significantly 12% are far younger – aged between 50 and 60 years. With more people than ever before in this demographic, many more will decide to sell up their family homes and move into something requiring less maintenance over the next few years.

For many, however, this doesn’t mean moving into a large apartment complex. Today’s downsizers often still want the same space and privacy they’re used to from life on Sydney’s Upper North Shore. They simply want to avoid the weekends spent raking and mowing the lawn or maintaining the backward swimming pool.

In its place, they’re looking for a ‘lock-up and leave’ lifestyle that’s close to amenities, including restaurants, cafes and public transport. Townhouses can often provide the perfect next step – especially in upmarket village suburbs, where property values are high.

The other factor worth noting is that today’s downsizers often expect some level of luxury in their new home. This means there is extra demand for brand new, boutique, off-the-plan terrace and townhouse developments, with all the high-end features, space and privacy these buyers are looking for.

Young families also in the hunt

But in today’s market, townhouses don’t only appeal to downsizers. Many young families who want to upgrade from an apartment, or move into our area, are also looking for this style of home. And we’ve noticed there are three key reasons for this.

Traditionally, smaller terraces and townhomes often provide a cheaper entry point into prestige areas. For instance, the median price for a detached four-bedroom home in Killara is almost $3.9 million, according to Domain. A townhouse can sometimes provide similar living space on less land, for a lower price. But this changes when we’re talking about the newer, high-end developments emerging in recent years as you’ll read below.

Second, like downsizers, many upsizers are looking for less maintenance on their family home. Today’s professionals are facing longer working hours and busier lives than ever before (roughly a quarter of residents on the Upper North Shore report working more than 45 hours a week). The idea of low-maintenance living, where the weekends can be dedicated to family and friends rather than household chores and maintenance, often holds great appeal.

Finally, the cost of renovating is rapidly rising, and the timeline for booking trades is also blowing out. Many buyers who would have once been happy with a ‘renovator’ are looking to save time and money by purchasing the finished product, such as a modern townhouse.

Lack of supply remains an issue

Despite this strong demand, the supply of townhomes in our area remains exceptionally low – and it has been an issue for some time. Five years ago, PwC released a report noting that Sydney lacked enough medium-density housing to satisfy its growing population, arguing that this ‘missing middle’ should become a greater focus for developers.

A year earlier, the Planning Institute of Australia highlighted the lack of variety in housing stock right across the country. It submitted that families wanted neither apartment living nor a detached home but something in between.

And with rising demand for this type of housing, the problem is only getting worse, especially here on the Upper North Shore. In fact, the most recent 2021 Census shows that many suburbs have an even smaller percentage of medium-density, semi-detached homes than five years before.

Here’s how key Upper North Shore suburbs break down when it comes to the number of semi-detached homes.

Is it changing?

Interestingly, the table shows that it’s often in the suburbs where land is most expensive that there are fewest townhouses and terraces. This could be because the higher costs mean developers often find themselves under pressure to maximise the number of sales from any development.

However, the signs are that – as demand for townhouses grows – some Upper North Shore developers are focusing instead on smaller, high-quality developments with a much higher average price. These developments are aimed specifically at downsizers and young families and often come with a new level of luxury and finishes.

As a result, we’re even seeing some townhouses sell for more than detached homes in the area. For instance, a townhouse in Lindfield sold for $4.7 million late last year.

These high prices are likely to encourage even more developers to enter the medium-density space, focusing on prestige townhouse developments rather than apartment blocks.

That should be welcome news to both downsizers and upsizers in our area, adding to its growing vibrancy as we see a new range of properties come to market.

Want more?

If you’re interested in finding out more about buying or selling townhouses in the Upper North Shore property market, get in touch.