Apr 9, 2023
Townhouse vs Apartment: Which Should You Invest in Melbourne?
Should you buy a townhouse or an apartment in Melbourne? Gidaya Group compares returns, lifestyle, and market trends to help investors decide in 2025
Melbourne's housing market continues to evolve, and investors are increasingly deciding between two popular options: townhouses and apartments. But which one is the smarter investment in 2025?
At Gidaya Group, we’ve delivered both townhouse and multi-residential apartment projects, giving us clear insight into the pros, cons, and growth potential of each. Here's what you need to know.
1. Price & Entry Costs
Apartments typically offer a lower entry price than townhouses, especially for 1–2 bedroom units in central locations.
Townhouses, while pricier, give you more land value and appeal to a broader range of tenants or buyers, including families.
Property Type | Average Entry Price (Melbourne, 2025) |
|---|---|
Apartment | $490,000 – $720,000 |
Townhouse | $690,000 – $1.1M |
2. Space & Liveability
Townhouses typically offer:
2+ storeys
Private courtyards or gardens
Garages
This makes them ideal for:
Families
Downsizers seeking more privacy
Investors wanting long-term tenants
Apartments usually offer:
Compact living
Shared facilities (gyms, pools)
Central location access
They’re great for:
Students
Professionals
Investors prioritising rental yields
3. Ongoing Costs
Apartments come with strata fees covering maintenance of lifts, lobbies, and shared amenities. These can range from $3,000–$6,000/year depending on building quality.
Townhouses have lower shared costs, and often operate under owners corporation rules with fewer obligations.
Cost Type | Apartment | Townhouse |
Strata Fees | $3,000 – $6,000/yr | $800 – $1,500/yr |
Maintenance | Covered by strata | Owner’s responsibility |
4. Rental Yields & Demand
Apartments: Can offer slightly higher yields (especially 1-bedders) in inner-city zones like Docklands, Southbank or Carlton.
Townhouses: Stronger appeal in middle-ring suburbs like Preston, Reservoir, or Box Hill where families seek more space.
Vacancy Rate Advantage: Townhouses tend to have lower vacancy rates and longer tenant stays.
5. Capital Growth Potential
Townhouses often outperform over the long term because they include land — an appreciating asset in Melbourne’s land-constrained market.
Apartments experience slower capital growth due to:
Oversupply in some pockets
Limited land ownership
Gidaya Group has observed stronger resale returns on 3-bedroom townhouses versus similarly priced apartments.
6. Future Flexibility
Townhouses offer more future flexibility:
Extension opportunities
Knockdown-rebuild potential
Dual occupancy conversion
Apartments are locked into their footprint with less upgrade or expansion potential.
7. Investor Verdict: Which Should You Choose?
Criteria | Best Option |
Lower Entry Price | Apartment |
Higher Capital Growth | Townhouse |
Higher Rental Yield | Apartment |
Long-Term Flexibility | Townhouse |
Lower Ongoing Costs | Townhouse |
Gidaya Group Recommendation:
Choose apartments if you prefer cash flow and lower upfront capital.
Choose townhouses if you're investing for long-term capital growth, land ownership, and broader buyer appeal.
Final Word
Townhouses and apartments both have merit — the right choice depends on your investment goals, time horizon, and preferred suburbs.
Want help evaluating a site or running a feasibility comparison? Gidaya Group’s development advisory team can help you decide which asset fits your strategy.
