Why Smart Investors Are Backing Auckland Townhouses in 2025
- Staircase Financial
- Sep 1
- 3 min read
The Smart Money Is Already In, Folks!
MPs Might Not Know What to Make of the Market… But We Do
Recent headlines have trumpeted the “worst housing slump in decades,” with Auckland values still well below their 2021 peak. Politicians spin it as a crisis.
Yet the truth is far more compelling: affordability has improved, construction economics are tilting in investors’ favour, and the townhouse sector is about to benefit from a capital growth surge that today’s buyers will be very glad they seized.
Why Townhouses Are the Next Wave of Capital Growth
Here’s the simple equation:
Today’s new townhouse costs are anchored in build contracts struck 12–24 months ago, when labour and material costs, though high, were still below where they’re heading.
Tomorrow’s new townhouse projects will break ground with higher consent fees, escalating material prices, tougher compliance, and rising construction wages.
That means the replacement cost of tomorrow’s supply will be significantly higher than what’s selling today. When the next cycle upswing takes hold, prices of existing new-builds must rise to reflect that gap. Investors who buy today are effectively locking in stock below the replacement cost curve.
Affordability Has Quietly Improved
The mainstream narrative says housing is “impossibly unaffordable.” But let’s look at the numbers:
Since 2021, median household incomes in Auckland have risen 21%.
Mortgage rates, while elevated in 2023–24, are now falling back as the OCR is cut, easing serviceability pressures.
Our Staircase Affordability Index (SAI) shows that relative to income, today’s mortgage burden is lighter than it was at the last peak.
In short: buying power has strengthened while property values have corrected sharply. That’s not a warning sign, it’s the very setup that precedes price growth.
Case in Point: The $11m “Once-in-a-Generation” Deal
The recent sale of a Mount Albert property for $11.177m wasn’t about the house, it was about the land and the future. Developers fought for it because they understand what many buyers miss: today’s purchase price is tomorrow’s discount, as replacement costs push higher.
The townhouse market operates on the same logic. Secure supply today at yesterday’s costs, and let tomorrow’s economics do the capital growth heavy lifting.
Staircase’s Playbook
Townhouses Are Today’s Best Priced Entry
They combine low-maintenance appeal with higher yields, and right now they’re selling below the cost curve of what’s coming.
Cycle Timing Matters
Capital growth accelerates fastest off affordability troughs. Every previous cycle has shown this. Today’s income gains and falling mortgage costs point to that trough.
Replacement Cost = Price Floor
As new projects get consented at higher cost bases, yesterday’s stock becomes tomorrow’s “cheap” buy.
Affordability Tailwind
With Auckland incomes up 21% since 2021, serviceability is in a much stronger position than media headlines admit.
Conclusion: Buy at Today’s Costs And Bank Tomorrow’s Growth
While MPs argue over whether house price falls are “good” or “bad,” investors with a cycle lens see the real story: affordability is better, replacement costs are climbing, and the townhouse sector is set for an inevitable capital growth rebound.
At Staircase, we’re helping clients position now, before it becomes obvious that the townhouse you buy today will be worth more once the next cycle kicks in.
What's better yet, if you already own your own home, you might be able to make a move without needing a deposit.
Use the free calculator below to see what value could be unlocked from your property, and our team will reach out to book a free strategy session to discuss your options.
