New build townhouse report 2026

Residential market outlook remains neutral

Sales activity has increased across the wider residential market, but prices remain flat in most regions. Markets in the South Island are generally performing better than those in the North Island. In the near term, prices are likely to remain steady.

Interest rates are the key watchpoint

While interest rates have reduced substantially from recent peaks, the market saw minor increases in some home loan rates towards the end of 2025. The pathway for interest rates remains uncertain. Inflation and pockets of positive economic data may place upward pressure on rates, but the employment market remain soft.

Inside the townhouse buyer mindset

Bayleys’ survey of buyers shows affordability and low maintenance are key drivers for buyers considering townhouses. Buyers are typically concerned about disruptions from neighbours, constrained space, and insufficient parking. Interior cooling / ventilation and charging for electric vehicles are expected to become higher priority features in coming years.

Development recovery gaining momentum

Developer sentiment has improved compared with a year ago. Early signs of a recovery are being observed, with a rise in building consents over the past 12 months. Off the plan sales remain soft for generic product, but stronger activity is being seen on product that has been differentiated to resonate with its target market.

Rethinking product mix

Buyer feedback is prompting a rethink in product design. The market is pivoting from narrow three-level to wider two-level layouts. Zero-lot standalone homes are also gaining traction in schemes that might have previously favoured attached housing. Higher end projects are increasingly incorporating lifts to broaden appeal to downsizers.

South Island leads while Auckland absorbs stock

Townhouse markets in the lower South Island are generally performed stronger than the North Island. The Auckland market continues to face elevated inventory, with price expectations often set above achievable levels and high land costs constraining feasibility for new projects.