Townhouses have become one of the defining features of Melbourne’s property landscape.
As affordability pressure pushes more buyers toward attached dwellings, it’s no surprise that townhouses and units have actually been outperforming standalone houses on growth in many markets.
But not all townhouses are created equal — and knowing the difference can save you from buying into a developer’s cash cow rather than a genuine long-term asset.
At its core, a townhouse sits on residential land that has been subdivided more than twice. A properly structured townhouse will have:
Townhouses are appearing all over Melbourne as developers respond to demand for more affordable, well-located housing. But while the growth story sounds appealing on paper, plenty of townhouses barely see any capital growth at all — especially once you factor in entry costs, exit costs, and ongoing holding costs.
The best townhouses don’t feel like townhouses at all — they feel like houses. Look for a freestanding dwelling with its own driveway, a front yard, and some back yard space. The less you share with your neighbours, the more the property behaves like a standalone home in terms of both liveability and long-term value.
The strongest townhouses are almost always inner city, generally within a 15-kilometre radius of the CBD. Townhouses in outer suburbs are far less common for good reason — outer areas typically lack the amenity base needed to support denser living. Inner suburbs offer proximity to employment hubs, train lines, entertainment, restaurants, and premium schools. Without that infrastructure, an outer-suburb townhouse is often less a smart investment and more a developer’s cash cow.
Here’s the trade-off buyers need to understand: the more a block of land is carved up to fit additional properties, the more compromises get built in. Shared walls, shared roof spaces, shared driveways, and body corporate fees all start to creep in — and at a certain point, the townhouse starts to resemble apartment living, with all the same compromises.
Shared amenities come at a real cost to the owner:
All of this makes a property less desirable to live in — and less desirable properties tend to struggle on resale.
There’s another trap to watch for. Developer cash cows are often dressed up with premium fixtures and fittings to make compromised living feel more comfortable. It works — for a while. But fixtures and fittings depreciate to zero over time. A ten-year-old kitchen, no matter how impressive it looked on display day, is already well past half its useful life. The true, lasting value in any property is the land component — not the finishes sitting on top of it.
None of this is to say townhouses should be avoided. A good quality townhouse — one with its own title, minimal shared infrastructure, and a strong inner-city location — can genuinely outperform a house on lifestyle and running costs. Benefits include:
The key is knowing which box you’re buying into: a genuine, freestanding-style home in a well-serviced location, or a densely packed development designed primarily to maximise a developer’s return.
