Smaller house builds designed to meet cost pressures

Tighter home buyer budgets and rising construction costs have led one group home builder to offer smaller options in a bid to meet the changed market.

Stonewood Homes, which is owned by the Chow brothers’ Stonewood Group, has released a range of standalone house designs that range in size from 115-147m².

Previously, the company only had six designs for houses under 147m².

Stonewood Homes general manager Gregg Somerville​ said construction firms have had to pivot to survive the changed market.

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Building costs were higher, interest rates had gone up, lending conditions were tougher than they used to be, and vacant sections were scarce in some areas, and this had impacted on the market, he said.

There were 46,924 new homes consented nationwide over the year to March, a decline of 7.9% on the 50,858 consents issued in the year to March 2022, according to Stats NZ’s latest figures.

Consents for standalone houses fell 23%, but consents for multi-unit homes, including townhouses, apartments, flats and retirement village units, were up 6.6% over the same period.

Somerville said affordability issues meant there was stronger demand for homes that cost less, and in the main centres that was driving the growth of townhouses.

“But people are also subdividing, and we’re doing a lot of infill sections in existing neighbourhoods, and many of these are tight blocks.”

It was necessary to be creative with house designs to fit small and irregularly shaped sections, and that prompted the company to release its new range of smaller standalone house designs, he said.

“We’ve had to respond to the changing market, as the budgets and borrowing capability of new home buyers have tightened.”

The new range of houses were designed to suit smaller lots, and to give home buyers as much home-for-the-money as possible.

Stonewood’s designer Peter Mannion said to get a house down to a certain size a room might have to be dropped, so the other rooms were still a reasonable size.

If that was not done a house could end up with very small rooms, and it was all about balance, he said.

“While the houses have a smaller footprint, we are still able to fit three bedrooms and two bathrooms in the majority of the houses. People may not be able to have two living/family spaces though.”

It was about compromising in the current market, but that did not mean houses had to be boring or lacking in architectural flair, he said.

Karen Phillips, chief executive of new home loan specialist NewBuild, said it was possible for people wanting a new home to get one if they were willing to work with the market.

The average loan for a new build was for between $600,000 to $700,000 plus the deposit, she said.

“But while material prices are stabilising and more builders are able to offer fixed-price contracts, lending criteria has changed significantly over the past three years.

“That means people may still need to adjust their expectations to get into their new home.”

Tougher market conditions had impacted on all buyer groups, but first home buyers had managed to “hold on” relatively well, according to a recent CoreLogic report.

One reason for that was their willingness to compromise on the type or location of a property, CoreLogic chief property economist Kelvin Davidson said.

“It would appear first home buyers are looking more closely at smaller dwellings, such as townhouses, in Wellington and Christchurch than they would normally do.

“Smaller dwellings are also relatively more popular with them than normal in Auckland.”

But the data also reflected that this type of property had become more readily available recently, due to construction trends, he said.