Australia's Evolving Townhouse Scene: Insights from 2023 to 2025

Over the past few years, Australia's property landscape has witnessed a dynamic shift in the townhouse market. Between 2023 and 2025, new townhouses have become a key focus, driven by evolving buyer demands and broader economic trends.

Rising Price Trends

Recent forecasts, including KPMG’s Residential Property Market Outlook, suggest that unit prices—which cover both apartments and townhouses—are set to climb by approximately 4.6% by 2025, with a further increase to 5.5% anticipated in 2026.

Key Factors Shaping the Market

Several underlying factors have contributed to the momentum in the new townhouse arena:

• Affordability Concerns: As prices for detached houses continue to rise, townhouses are emerging as a cost-effective alternative, combining space with lower purchase prices.
• Urban Development Policies: Government initiatives encouraging higher-density living in urban centres have paved the way for increased townhouse developments, especially in capital cities.
• Lifestyle Trends: Townhouses appeal to a diverse range of buyers, including downsizers and young families, offering a balanced lifestyle with the benefits of space and minimal upkeep.

Regional Market Highlights

Market performance varies by region:

• Brisbane: Enjoying robust growth, Brisbane’s market has seen many suburbs reporting median prices exceeding the $1 million mark.
• Sydney and Melbourne: In these cities, townhouse prices have risen steadily, albeit more modestly, influenced by supply limitations and the challenge of maintaining affordability.

Looking Forward

The future of the townhouse market appears strong:

• Steady Price Appreciation: Continued demand and constrained supply suggest steady, if modest, price increases.
• Investor Attraction: Attractive rental yields and consistent market interest make townhouses appealing to investors.
• Ongoing Developments: New infrastructure projects and urban growth corridors are expected to further bolster the townhouse sector.

Conclusion

Between 2023 and 2025, Australia's new townhouse market has shown consistent growth, propelled by factors such as affordability, strategic urban planning, and evolving lifestyle preferences. As the market continues to adapt, townhouses are set to remain a prominent feature in the nation’s housing portfolio.

Sources: KPMG, Property Update