The ideal density of a townhouse: Secret Agent

The ideal density of a townhouse: Secret Agent
The ideal density of a townhouse: Secret Agent

Across inner Melbourne, townhouse developments are becoming increasingly common, according to Secret Agent's latest report.

With limited block sizes closer to the city, developers have to constantly negotiate the size of the actual house with the amount of land available.

Because of these varying levels of building density, Secret Agent wanted to find out if there was a ‘sweet spot’ in the ratio between indoor area and land area.

Are we paying more for a certain ratio?

For the purpose of this bulletin, density refers specifically to the ratio between indoor built area to total land area.

See the diagrams below.

Townhouses nearly always span multiple levels, meaning they often have more indoor area than total land area.

Click to enlarge

The ideal density of a townhouse: Secret Agent

Our sample consisted of 232 townhouse sales across 29 suburbs in inner Melbourne, all of which took place between January and December 2016.

A hedonic regression model was used and controlled for area (suburb), sale date, number of bedrooms, bathrooms and car spaces, and size of indoor and outdoor habitable space.

Overall, the ratio of indoor area to land area (in m2) did not have a statistically significant impact on townhouses as a continuous variable (i.e. not categorised).

"However, if we group townhouses with similar ratios into different ranges (e.g. 1:1.5 to 1:1.75), we found that an initial increase in the ratio (i.e. more dense development) led to an increase in average sale price, but the trend quickly reverses as the ratio increases further," the report stated.

Click to enlarge

The ideal density of a townhouse: Secret Agent

The only ratio that had any significant positive impact on expected sale price was a 1:1 ratio, up to a 1:1.27 ratio.

On average, townhouses in this category had a land area of 95m2 and an indoor square metre rate of 109m2.

Additionally, these properties had outdoor space (land area not occupied by the building) of 34m2, which is about 36% of the total land, however this was not a prerequesite for the 'sweet spot'.

It is expected that townhouses in the 1:1 to 1:1.27 range can sell for up to 15.15 percent more than denser developments with twice as much indoor area as the land size.

While there is always a demand for bigger houses, it's important to remember that there is such a thing as too much space.

Property Observer found these townhouses currently on the market in Melbourne.

A two bedroom townhouse in Richmond, 11/22 Buckingham Street, with roof top views (pictured above) is currently on the market for between $720,000 - $780,000.

In MALVERN EAST, the three level three bedroom townhome (below) at 1039E Dandenong Road Malvern East is up for auction March 11 through Krish Bundhoo and Courtney Matthews of Ray White Mount Waverley.

The ideal density of a townhouse: Secret Agent

 The ideal density of a townhouse: Secret Agent

 A four bedroom townhouse in Doncaster East3/27 Paula Crescent, (above) is on the market with expectations of between $1.05m - $1.15m.

For more information, click here.

Melbourne Townhouses

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