What Is a Townhouse? Its Pros and Cons

Plenty of first-time buyers assume that they won’t be able to afford a house in an Australian capital city anymore.  

And this begs the question: should you buy a townhouse as an alternative?

We often discuss how apartments and townhouses don’t grow as much as houses. 

But it’s important to consider all the pros and cons associated with buying a townhouse in Australia. 

But before looking into these pros and cons in this townhouse guide, it’s critical to first know the answer to the question: what is a townhouse?

A townhouse is a residential building that will usually share walls with adjacent units. Townhouses are often multi-storied and are considered a balance of space, privacy and cost. Not quite as big as a home, but not as small as an apartment.

Townhouses are becoming increasingly popular in urban areas for this very reason and cater to a wide range of first home buyers.  

Let’s take a look at the pros of a townhouse in more detail!

The Pros

As we’ve mentioned, townhouses do offer that balance of affordability and privacy.

Townhouses can offer a range of benefits for first home buyers, professionals, retirees, and investors.

Size and space 

A big plus for those looking to invest in or purchase a townhouse is the size and space they offer when compared to an apartment.

While not as large as a typical home, townhouses can still provide plenty of space for a couple or small family. 

Most townhouses also maximise the vertical space they are built on, usually split between two or three levels. This can help with making the townhouse feel bigger and offer a bit more privacy across each floor.

Affordability 

Townhouses are usually more affordable than single-family homes, as they are multi-storied and don’t take up as much land space. 

This allows buyers with a smaller budget to still buy relatively close to the city. 

But remember, there are plenty of extra costs involved with owning a townhouse which we touch on later.

Privacy

Townhouses still have the potential to provide a level of privacy that you may not necessarily get with an apartment. 

While most apartments will generally have a range of shared spaces, such as hallways, evaltors, lobbies and car parks, this usually isn’t’ a concern for townhouses. 

Yes, you might still have to share a wall with the neighbours, but at least they aren’t above and below like in an apartment. 

Investment Opportunity 

A townhouse can also provide a better investment opportunity than an apartment.

While you aren’t buying as much of the land as you would when buying a house, you’re still buying a decent chunk of property that the townhouse is built on. 

Compare this to buying an apartment, and it’s clear to see the investment potential. Remember, it’s land that appreciates, not the building.

Townhouses generally have better rental yield than apartments and have the potential to appreciate more as well. 

This can also provide a significant capital gain when the time comes to upgrade or sell, as the value of a townhouse can also rise from the date of purchase. 

With a cheaper entry point over houses, it’s easy to see why so many new investors are looking to townhouses to start their portfolio.

For more on investing in townhouses in Australia, check out the video below 

The Cons

When asking the question “should i buy a townhouse?” it’s important to have a proper grasp of the cons before making any decisions. 

It’s not a detached house

The biggest negatives will really come from the fact that it isn’t an independent house. 

Yes it may be a better alternative to an apartment, but a townhouse won’t replace the potential of a detached house. 

Land size and building size will generally be smaller, offering not as much space to house  medium-large size families. 

And yes, you may have less common spaces than in an apartment, but a detached house will always be the best option when it comes to privacy.

The style and build

Another big drawback for a lot of people when investigating potential townhouse opportunities, is the manner in which they’re built.

They will also follow a cookie-cutter design when it comes to the interior and exterior design. 

While investors may not see this as a big deterrent, they should consider the appeal living in these types of homes may have and how this could impact rental prices.

Strata title and body corporate fees 

The big negative you’ll hear quite often when it comes to buying a townhouse is the extra costs.

As you’ll be on a strata title and body corporate, there will usually be some mandatory fees imposed on you when purchasing.

While the affordability of a townhouse is a real plus, buyers should properly consider the need to pay these fees when budgeting.

Body corp may also impose restrictions on renovations, as well as require regular input into management decisions when it comes to the property.

The bottom line…

As with so many decisions in property investing, the choice  to buy a townhouse really comes down to your personal preference and circumstance.

Is a townhouse a better option than an apartment? Almost always. But investing in a detached house will usually bring more financial success than purchasing a townhouse.

It’s about weighing up the pros and cons and aligning the options with your circumstances.