Is Building a Townhouse Still Worth It in 2025?

With rising land prices, shifting buyer behaviour, and tighter planning restrictions, many Melburnians are asking — is it still worth building a townhouse in 2025?

At Gidaya Group, we’ve helped clients make smart decisions on townhouse development across inner and middle-ring suburbs. Here’s our builder’s breakdown of whether it stacks up in today’s market.

What is a Townhouse, Exactly?

A townhouse is a multi-storey residence that typically shares walls with another dwelling but has its own title, entry, and often a small courtyard. It blends the benefits of freestanding homes with the compact footprint of apartments — and that’s made them a go-to development type in many Melbourne suburbs.

Townhouse Development: Costs vs Value in 2025

In 2025, the average cost to build a townhouse in Melbourne sits between $2,530 and $3,300 per square metre, depending on finishes and location.

For a typical 150m² townhouse:

• Standard build: ~$390,000

• Premium finish: ~$495,000

Land costs add to this total. In inner to middle-ring suburbs, land often represents 50%–60% of total project costs. Subdivision, demolition, permits, landscaping and GST are additional considerations.

Why Townhouses Still Make Sense in 2025

Despite rising build costs, townhouses remain a strategic choice for Melbourne developers and owner-builders.

1. Higher Density on Smaller Blocks

You can achieve 2–3 dwellings where only one once stood. That’s efficient land use and opens the door to subdividing and selling individually.

2. Appeals to Diverse Buyers

From downsizers and first-home buyers to investors and young families, townhouses tick multiple boxes. Demand remains strong in proximity to transport, schools, and retail hubs.

3. Lower Maintenance, Higher ROI

Compared to freestanding homes, townhouses offer lower upkeep — and often deliver better rental yields per dollar invested.

4. Lifestyle Alignment

Townhouses suit changing demographics: fewer kids, later in life, more time poor. Shared walls aren’t a dealbreaker anymore — they’re normal.

Are There Downsides in 2025?

Yes — but they can be managed with smart planning and an experienced builder:

• Planning Pressure: Councils are tightening rules around dual occupancy and multi-unit development in established suburbs.

• Construction Costs: Still elevated from supply chain disruptions post-pandemic.

• Resale Uniformity: Some buyers prefer stand-alone homes for privacy or individual appeal.

Gidaya Group helps you navigate these risks with proper feasibility and suburb-specific design.

Where Are Townhouses Thriving in Melbourne Right Now?

In 2025, townhouse builds continue to surge in:

• Glen Iris & Ashwood

• Blackburn & Mitcham

• Bentleigh & Cheltenham

• Heidelberg & Ivanhoe

• Carnegie & Oakleigh

These suburbs offer large legacy blocks with favourable zoning and buyer demand.

FAQs

Q: Is it cheaper to buy or build a townhouse in Melbourne?
Building offers better design control and future resale flexibility — but requires upfront capital and time.

Q: How long does a townhouse build take in 2025?
On average, 10–14 months from design to handover, depending on permits and site conditions.

Q: Can I build multiple townhouses on my block?
It depends on zoning, overlays, and lot dimensions. Gidaya Group offers site assessments to evaluate potential.

Gidaya Group’s Take: Is It Still Worth It?

Yes — if the location is strong, planning is favourable, and the design is high quality. Townhouses in 2025 remain one of the smartest pathways to unlock land value and create flexible, saleable housing.

We help clients navigate:

• Feasibility + ROI modelling

• Planning permits + VCAT defence

• Design, documentation + compliance

• Full turnkey construction

Book a Feasibility Consult with Gidaya Group

Not sure if your block is townhouse-ready? Let’s discuss the yield potential and buildability of your land.