How Global Cities Are Embracing Townhouses (and What It Means for Investors)
- Staircase Financial
- 22 hours ago
- 5 min read
As Auckland grows, it faces the same challenge many major cities have already navigated: how to house more people affordably without pushing everyone to the fringes.
Cities like Sydney, Melbourne and Vancouver have responded by leaning into densified urban living, with townhouses and apartments now reshaping the housing landscape.
Auckland is following the same trajectory, and the perception of medium density housing is changing.
Townhouses are no longer seen as a compromise. They are emerging as a smart, future focused investment choice that offers strong yields, affordability and long term demand.
Global Cities: A Shift Toward Density
In fast growing cities where affordability and population pressure dominate policy conversations, the old suburban sprawl model has reached its limits.
Governments and developers are prioritising medium density homes such as townhouses, terraces, duplexes and low rise apartments to keep people close to jobs, public transport and key amenities.
The result is a global trend toward urban density, and Auckland is now firmly part of that movement.
Housing Type Breakdown by City (Latest Data)
City | Detached Houses (%) | Apartments/Townhouses (%) |
Vancouver (2021) | 27% | 72% |
Sydney (2021) | 56% | 44% |
Melbourne (2021) | 68% | 32% |
Auckland (2023) | 72% | 28% |
Vancouver now has more than 70 percent of households living in apartments or townhouses.
Sydney’s planning reforms have opened large areas around transport hubs for 2 to 3 storey townhouses, terraces and low rise apartments.
Melbourne has experienced significant inner city densification, with population density in central areas rising almost 50 percent over two decades.
Auckland, which has historically been dominated by standalone homes, is beginning to catch up. Joined dwellings have grown from around 19 percent of homes in 2018 to roughly 28 percent in 2023.
Why This Matters for Investors
Medium density homes are more space efficient, more affordable and easier to maintain. Shared walls and smaller land footprints allow more homes on the same land area and keep residents close to workplaces, transport and lifestyle amenities.
All of these factors support stronger rental demand and long term capital growth.
These homes also fill the “missing middle”, offering an appealing alternative between high rise apartments and traditional suburban houses.
Importantly, increased density supports affordability by boosting supply where demand is highest. Auckland’s Unitary Plan is a strong example.
The upzoning introduced in 2016 enabled the development of more than 20,000 additional homes between 2016 and 2021.
This additional supply helped moderate rent and price growth. From 2017 to 2024, Auckland rents increased by 22 percent, compared with 34 percent nationally.
Studies also show that rents for three bedroom homes are now 26 to 33 percent lower than they would have been without the upzoning.
For investors, this combination of moderated price growth and sustained demand creates a stable foundation for medium density investment.
Auckland vs Melbourne, Sydney and Vancouver: What Can Investors Get for Their Money?
There remains a misconception that townhouses are a second best option. A closer look at major global cities tells a different story and highlights how attractively priced Auckland’s medium density market is.
Property Price (NZD) Comparison (2025)
Property Type | Auckland | Melbourne | Sydney | Vancouver |
New 3 bed Townhouse | $700,000+ | $1,160,000+ | $1,300,000+ | $1,300,000+ |
2 bedroom Apartment | $650,000+ | $750,000+ | $900,000+ | $945,000+ |
Existing 3 bedroom House | $950,000+ | $1,100,000+ | $1,800,000+ | $2,400,000+ |
(Sources: REINZ/Barfoot & Thompson, Cotality, Wowa.ca)
In Sydney, Melbourne and Vancouver, buyers often need more than NZD 1.2 million for a well located new townhouse. In Auckland, comparable townhouses can still be purchased from around NZD 700,000.
Yield Advantages: Where Auckland Stands Out
Purchase price is only part of the equation. Rental yields further strengthen Auckland’s position.
New townhouses in Auckland often achieve gross yields around 4 to 5 percent.
Central city apartments frequently achieve yields closer to 5 percent.
Sydney’s yields sit much lower at 2.6 percent for houses and 3.9 percent for units.
This creates a compelling combination for investors: a lower entry price and a higher yield compared with larger global cities.
For example, Auckland’s average house price is roughly $1.04M, which is about 60 percent of Sydney’s $1.67M average.
For townhouses, the gap is even wider.
Sydney’s inner city terraces often cost twice as much as comparable Auckland townhouses.
In a global context, Auckland’s medium density homes remain relatively affordable, especially when weighed against their rental performance.
The Trend Is Clear: Townhouses Are the New Normal
Across major cities, the direction is unmistakable. Sydney’s ambitious planning overhaul, Vancouver’s shift toward apartment living and Melbourne’s long running densification all point to the same conclusion. Modern cities are moving toward more compact forms of housing.
Medium density housing is no longer niche. It is now an essential part of the urban supply pipeline.
Auckland is heading in the same direction. The Unitary Plan opened up capacity for hundreds of thousands of new homes and triggered a large increase in townhouse and apartment development.
Auckland’s per capita construction rates have outpaced other parts of New Zealand and have even been comparable to those of much larger Australian states.
Importantly, much of this growth has occurred in areas with established infrastructure and good transport connections. This has supported the creation of more walkable and vibrant neighbourhoods rather than pushing development into far flung areas.
For developers and landowners, rezoning has increased the value of sites with development potential.
For buyers and investors, the increased supply has helped moderate long term price growth. It is a rare outcome that benefits both sides of the market.
Why Townhouses Are Becoming a Prime Investment Class
For investors, the rise of medium density housing presents a significant opportunity.
Townhouses in particular offer several advantages:
Ownership of land, which generally supports long term capital growth
Newer builds with lower maintenance requirements
Efficient layouts that appeal to modern renters
Urban locations close to transport, amenities and jobs
Lower price points compared with standalone houses
Higher yields relative to purchase price
These features align closely with the needs of younger tenants and professional households who value convenience, lifestyle access and low maintenance living.
Auckland is now poised for a townhouse focused phase of growth. As densification continues and buyer preferences evolve, investors who enter the market now are positioning themselves ahead of a long term structural shift.
Townhouses are no longer simply an affordable alternative. They are becoming the preferred option in global cities where land is limited and demand for well located homes remains strong.
Auckland’s progress suggests that the outlook for this asset class is very promising.
If you're considering investing in New Zealand's growing townhouse market, the key is understanding where the strongest long-term opportunities lie. Our team can walk you through the latest yield data, suburb trends and upcoming developments.
If you'd like tailored guidance, you can book a free strategy session with our team.
We’ll help you assess your budget, goals and preferred time horizon so you can make confident decisions in a fast-changing market.
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