When anecdotes replace evidence in the housing debate
One of the more frustrating features of New Zealand’s housing debate is how often individual examples are used to “prove” sweeping conclusions. A townhouse development takes longer than expected to sell, and suddenly it becomes evidence that nobody wants townhouses. A developer reduces prices, and suddenly it becomes proof that medium-density housing has been rejected by the market. A project is delayed, and suddenly it demonstrates that planning rules were never the problem.
The pattern is remarkably consistent. A single data point is elevated into a grand theory while the wider context is quietly ignored.
Recently I came across a familiar version of this argument. The claim was that a local Kāpiti townhouse development had struggled to sell, therefore the market had rejected medium-density housing. On the surface, it sounds plausible. But once you step back and look at what has actually happened in the housing market over the last few years, the argument quickly falls apart.
Since the property market peaked in 2021, house prices have fallen significantly across New Zealand. Nationally, values remain around 16 percent below their peak. Wellington has experienced one of the sharpest corrections in the country, with values roughly 27 percent below their highs.
Importantly, this decline has not been confined to townhouses.
Standalone homes have fallen in value. Apartments have fallen in value. Sections have become harder to sell. Properties across the market have spent longer on the market and vendors have adjusted their price expectations accordingly.
Yet somehow, when a few townhouses struggle to sell, detractors of development treat it as evidence of a unique failure of medium-density housing rather than part of a broader market correction affecting almost every housing type.
If we think specifically about Wellington’s housing market, it is not just dealing with higher interest rates and the aftermath of the pandemic-era boom. It is also grappling with a significant economic shock of its own.
The public sector is one of the region’s largest employers. Over the past two years, thousands of jobs have either been cut or placed under review as government agencies have reduced spending and restructured their operations. Even for those who remain employed, the uncertainty created by ongoing change programmes has inevitably weighed on confidence. All of this is even before we consider how many people have left, or are likely to be considering leaving, the Wellington region entirely due to these prevailing conditions.
When households are worried about job security, they tend to delay major financial decisions. First-home buyers become more cautious. Existing homeowners postpone upgrading. Investors step back. That reduction in demand affects the entire housing market, regardless of whether a property is a townhouse, apartment, or standalone dwelling.
Viewed in that context, slower townhouse sales in Wellington tell us remarkably little about whether people want to live in medium-density housing. They tell us far more about the state of the wider economy and the particular challenges facing the capital.
The same selective reading of the evidence can be seen in responses to a recent RNZ story highlighting that almost one in five townhouses is now selling for less than its previous purchase price.
To some opponents of housing intensification, this appeared to be a smoking gun. Finally, proof that New Zealanders do not want townhouses.
Except that is not what the article actually showed.
The story noted that losses on townhouses were broadly similar to losses being experienced by owners of standalone houses. In other words, much of what was being observed reflected a falling housing market rather than a rejection of a particular housing form.
There is also another factor often omitted from these discussions: supply.
For years, New Zealand has suffered from a chronic housing shortage. Economists, planners, governments, councils, business groups, and housing advocates have all pointed to the same fundamental problem. We did not build enough homes in the places where people wanted to live.
When supply is constrained, prices rise.
When supply increases, prices face downward pressure.
That is not a flaw in the system. It is the system working as intended.
As more townhouses have been built over recent years, it should not be surprising that townhouse prices have become more competitive. Buyers have more choice. Developers have to compete harder. Sellers lose some pricing power. These were all points made in the RNZ article and which have been conveniently ignored by those citing it as evidence that townhouses aren’t wanted.
For years we were told that New Zealand needed to build more homes to improve affordability. We cannot then turn around and point to softer townhouse prices as evidence that building more homes was a mistake.
None of this means every development will be equally successful, or that every project will meet the market in exactly the same way. Location, timing, pricing, design, and buyer preferences all still matter.
It’s also worth mentioning that small and medium developers have less of an ability to sit on projects to release them when market conditions improve. They often need to turn over projects relatively quickly, whereas larger corporations have the balance sheets to sequence projects over the longer term.
The broader lesson is that housing markets do not operate in a vacuum. They are shaped by interest rates, employment prospects, population growth, lending conditions, and local economic confidence.
Ignoring those factors and pointing to a handful of townhouse developments as proof that medium-density housing has failed is not serious analysis. It is simply taking a complex market and reducing it to a convenient anecdote.
The result is a debate where anecdotes are treated as evidence and evidence is dismissed as ideology.
For example, on my posting a short response covering the above broader evidence and context, this was somehow equated with Holocaust denial in a now deleted reply by one extremely vocal opponent of medium-density housing. Previously, I’ve been accused of wanting to cover Kāpiti in Soviet-style apartment blocks or “stack and pack prisons” by others in the same camp.
It’s telling that, went faced with evidence and reasoned debate, instead of challenging the facts, medium-density housing opponents chose to retreat to absurdity and hyperbole.
If we are serious about addressing New Zealand’s housing challenges, we need to be honest about what the data actually tells us. Otherwise we risk slipping back into the same pro-sprawl, anti-densification policies that were central to creating the housing crisis in the first place.
A struggling townhouse development during one of the country’s largest housing downturns does not prove that medium-density housing has failed. It simply proves that townhouses, like every other form of housing, exist within the same housing market as everything else.
A housing market, we should remember, that at its peak was among the most unaffordable in the developed world.
If increased housing supply is putting downward pressure on prices, that is not evidence of failure. It is evidence that the market is finally beginning to work as intended.