The great Australian dream is changing.
Forget the old script — the classic house with a front and back yard isn’t the only path to home ownership anymore.
More and more buyers are opening their minds to apartments, townhouses, and properties of every shape and size.
So which one’s actually right for you? It all comes down to what you really want out of your next home — and the answer might surprise you.
If your lifestyle needs are city based, then this could be a great a great way to simplify your life. A metropolitan area offers employment, entertainment and the premium dining options. Residence can skip the daily traffic jam from the suburbs and enjoy the luxury of walking to work and potentially not having to own a car.
Do apartments make good investments? In short, no. Looking at the Melbourne apartment market, few apartments have made good investments over the last 7 years. A few reasons why apartments haven’t been good investments:
The few apartments that have had great capital growth usually feature the opposite characteristics of the above four points.
Some people believe you get what you pay for, with apartments this might not aways be the case. A high price doesn’t mean a great grwoth or a low price doesn’t mean poor returns.
Finding a diamond in the ruff isn’t impossible and you most likely need professional assistance when buying an apartment to reduce your risk of losing allot of money.
Townhouses have grown in popularity since the 1990’s as they offer affordable living closer to the city usually more space than an apartment, cheaper than a standalone house.
What are town houses? Townhouses are typically double-storey, compact homes that share a single residential block of land, with anywhere from two to ten allotments per block. Land sizes range from 140 sqm up to 300 sqm, the best town hosues a free standing proeptys, the more compact property’s share walls or and roof spaces.
Do townhouses make good investments? In short, yes and no — it depends on the specifications of the townhouse, its land size, and the suburb.
In premium inner-city suburbs, luxury townhouses with larger land allotments can sell for a premium. In outer suburbs, townhouses on smaller land allotments can be harder to sell and often struggle to achieve any capital growth.
That said, there are also plenty of inner-city luxury townhouses with a history of poor capital growth. This can make things confusing for buyers, which is usually where a buyer’s agent can help — advising on what type of property actually performs well in that particular suburb.
Buyers can get drawn in by premium fixtures and fittings, which wear and tear to the point of losing all value — leaving you with little more than a small block of land. So a key to success is definitely a large land allotment. Historically, the smaller the allotment, the less chance of capital growth.
Another major key to success when owning townhouses is buying a property that hasn’t been subdivided too many times. Ideally, a two-lot subdivision has the most demand — the property is freestanding, doesn’t share a driveway or walls with its neighbours, and sits on a minimum land allotment of 300 sqm.
More information on buying an Investment property in Melbourne.
A major factor in good capital growth is the proportion of land you own. As in the above townhouse example, fixtures and fittings, bricks and mortar eventually need replacing hence the true value is in land ownership. The more you have the more it’s worth.
Houses with large land allotments can attract premiums when it comes to resale, this is because it appeals to many groups of buyers on resale.
Hence land can give its owners allot of options like developing into a multi-unit site, extending the existing dwelling or adding lifestyle amenities like a pool or tennis court.
Historically, houses across Melbourne, Sydney and Brisbane have been the best preforming when it comes to capital growth. It’s hard to find houses that haven’t doubled over the last 10 years.
For more information on buying a house in Melbourne.
What is the most important factor in capital growth when owning property?
Land is the long-term growth driver. Houses (and to a lesser extent townhouses) own land outright, which is why they’ve historically compounded in value faster than apartments — especially the high-rise apartment stock that oversupplied Melbourne’s CBD in the 2010s.
Is it true that townhouses appreciate in value slower than standalone houses?
Townhouses currently sit in a sweet spot — Melbourne data through 2026 shows unit and townhouse growth outpacing houses, partly because affordability pressure is pushing more buyers toward attached dwellings.
Don’t apartments typically have higher rental yields than houses?
Body corporate fees matter more than people expect — they can eat a meaningful chunk of any rental yield or ongoing budget, especially in larger apartment complexes with lifts, pools, or concierge services.
Whats more important when buying property, better suburb/smaller property or a larger block of land and a smaller property?
Suburb matters more than dwelling type — a house in an outer growth corridor (like Melton, around $510k) can cost less than a townhouse or apartment in an inner suburb.
