Are townhouses worth the pricetag?
A townhouse purchase works from a financial perspective. Director of the Hallmarc Group, Michael Loccisano, said land values often rose in off-the-plan transactions between the time of paying a deposit and settling – while the waiting time also gives buyers the chance to continue saving. This increase in equity is only the start. Minimal stamp duty (payable on the value of unimproved land) was another bonus that made townhouses attractive to first-time buyers.
There’s also a process in place for those struggling to acquire a large enough deposit. Many firms assist those without the usual 10 per cent deposits. Usually it involves the companies taking a five per cent deposit and initiating a series of mortgage-like progress payments between the deposit and settlement. At the other end of the scale, empty nesters can enjoy a boost to their retirement savings with the sale of their family home netting them a bank balance boost when factoring in the townhouse transaction.
Loccisano said the biggest hurdle confronting those preparing to downsize was touching and feeling the space they would inhabit, which is why Hallmarc designs full-size display suites. “What most people struggle with is an understanding of space … the reality is that most people can generally live in a smaller home of 10 or 11 squares if it’s designed well,” he said. “It’s what many Baby Boomers did when growing up.”
Solving the need to cater for an expanding population was a matter of applying common sense in relation to planning. Loccisano said many older existing houses on a 700sq m block within a 10km radius of the central business district could be replaced with two townhouses, minimising the loss of neighbourhood amenity and minimising the need for excessive development. “It’s not hard to implement. All we need is a planning policy that reflects the changing needs of our city,” Loccisano said.
Bearing this in mind, the rise of townhouse living has as much to do with the planning system as it does affordability. A planning permit is usually required for a house on a block less than 300sq m, but not for one more than 300sq m. The Small Lot Housing Code was introduced in 2011 to eliminate the need for a permit where a clear set of house design and siting standards are met. The house design and siting standards include requirements for setbacks, building height, provision of car spaces and private open space, overlooking, overshadowing, building articulation and fences.
Loccisano believes it is only a matter of time before townhouses replace freestanding homes as the dominant player in the family home market – particularly as the median price continues to increase. He cites affordability, population growth and lifestyle as key components in the shift away from commuting for “four hours a day, every day”. “Townhouses give families the space and privacy they need, rather than the communal living aspects of apartments,” Loccisano said. “Our townhouses at Point Cook, for example, have enabled a whole group priced out of the (detached) housing market to own their own home.” Equipped with Caesarstone benchtops, timber floors and quality appliances, the townhouses from 108sq m sell for $372,500. For that they receive a two-bedroom, two-bathroom dwelling over two levels, with landscaping and fencing included. Considering that a block within the same estate usually sells around the $300,000 mark, or that you’d be fortunate to buy a small one-bedroom apartment in the inner city for anywhere near the same price, a townhouse represents excellent value.
The “turn-key” or nothing to do but move in aspect is a bonus. A moderate annual Owners Corporation fee towards the operation of security gates and security cameras is the only additional impost. Intrapac Property chief operating officer Max Shifman said townhouses were a fantastic choice for first-time buyers and investors. “Townhouses typically provide more space and amenity than apartments, while being more affordable compared with detached homes in the same area,” Shifman said. “But price is not always the determinant. We are seeing a clear trend towards more compact housing – be it for young professionals, growing families or downsizers. Not everyone wants the hassle of looking after a large home and block of land; townhouses are much lower maintenance, meaning less time doing the lawn, and providing the flexibility to lock up and leave at a whim. When purchasing, buyers should always take note of the level of inclusions and finishes to ensure their expectations are met. As always, it is best to deal with reputable developers with a track record of delivering high-quality homes in the right locations. Price can be a constraint where affordability is key, but quality will always leave buyers better off in the longer term.”
Intrapac has incorporated townhouses into its developments, such as Somerfield at Keysborough. “The tide is turning on townhouses – from young first-home buyers who don’t want a huge home, to the influential Baby Boomer wanting to downsize for the convenience of a lock-up-and-leave home base,” Shifman said. “Some call it smart-sizing. In 2020, Australia’s median age will be almost 40. In 1980 it was just 29. Some one in four people will soon be aged over 60, so the need for suitable homes for downsizing is only going to increase. Moving to a townhouse, and releasing some wealth from the family home to assist with retirement, is a great option that many will consider over the coming decade.” Shifman said the trick to downsizing was to consider the move as a chance to clean up, and increase your spare time with less stress as you maintain a smaller home and garden.