Standalone Houses vs Townhouses: Which Asset Class Will See the Most Growth?
- Joshua Flack
- Jul 14
- 3 min read
Updated: Jul 25
TL;DR
The standalone house and the townhouse offer different things. The house gives you land, which is the scarce, appreciating component. The townhouse gives you a lower entry price, better yield, and easier financing through new build rules. Which wins on growth depends on what's actually scarce in a given market. This post compares the two honestly, because the answer isn't universal and the marketing on both sides oversimplifies it.
The standalone-versus-townhouse debate gets argued like a religion. It shouldn't be.
They're different assets that do different jobs. One is a land play. One is a yield-and-access play. The "best" one depends entirely on the market and your strategy, and anyone telling you it's always one or the other is selling something.
The Case for Standalone Houses
The argument for houses comes down to one word: land.
Land is the component that's genuinely scarce and that appreciates over time. Buildings depreciate. Land doesn't make more of itself. A standalone house on a decent section is mostly buying land, and over long periods land is what drives capital growth.
Houses also offer:
Development optionality (subdivide, add a dwelling, intensify later)
Broad tenant appeal, especially families who want a yard
Scarcity that increases as intensification removes standalone stock
The downsides: higher entry price, lower yield, and tougher financing without new build exemptions.
The Case for Townhouses
The argument for townhouses is access and yield.
Lower entry price, so you can get in with less capital
Better yield, because the price-to-rent ratio is usually stronger
New build townhouses qualify for LVR and DTI exemptions, materially easier to finance
Lower maintenance, no large section to manage
The downsides: less land (so less of the appreciating component), oversupply risk in glutted corridors, and weaker differentiation.
Which Grows More?
Here's the honest answer: it depends on scarcity.
In a market where standalone houses are becoming scarce (intensification removing them, no new ones being built), the land scarcity drives house growth.
In a market flooded with near-identical townhouses, those townhouses struggle for growth because supply caps it, while a scarce house outperforms.
But in an affordable, well-located area where townhouses are absorbed by genuine demand and houses are out of reach for most buyers, the townhouse can outperform on total return once yield is included.
Scarcity drives growth. Identify what's scarce in your target market, and that's your answer.
The Total Return Point
Growth isn't the only number. Total return is growth plus yield minus costs.
A townhouse with lower growth but stronger yield and easier financing can deliver a better total return than a house with higher growth but negative cash flow that constrains your ability to hold or expand. Don't fixate on capital growth alone.
Where This Leaves You
Houses are a land and growth play. Townhouses are a yield and access play. Neither is universally better.
Match the asset to the market and your strategy. If land is scarce where you're buying and you can afford the cash flow, the house's growth case is strong. If access and yield matter more and the area isn't glutted, the townhouse earns its place.
The financing difference between houses and townhouses is significant, especially with new build exemptions in play. That difference often decides which is actually achievable for you.
At CRISP, we connect the asset choice to what you can finance and what fits your strategy. The best asset class is the one you can buy and hold comfortably.
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About the Author:
Joshua Flack is a mortgage and lending adviser and the founder of Crisp Financial. Before finance, he spent two decades running businesses across construction, facilities services, and franchising, which is why his advice starts with how the numbers actually work rather than how the brochure says they should. He works with home buyers, investors, and self-employed borrowers across New Zealand, with particular depth in complex and non-standard lending. Crisp Financial Limited (FSP1012114) operates under the Link Financial Group FAP licence. The information in this article is general in nature and is not regulated financial advice.
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