Townhouses are fast becoming the property of choice for older first-home buyers taking advantage of the expanded Home Guarantee Scheme. Offering more space than apartments but lower costs than detached homes, townhouses are meeting the demand for affordability, functionality, and family-friendly living.
Key Takeaways
- Townhouses offer larger, more affordable housing for first-home buyers using the 5% deposit Home Guarantee Scheme.
- Older first-home buyers are driving this trend, often seeking family-sized dwellings.
- The expanded Home Guarantee Scheme removes income caps and increases property limits.
- Townhouse approvals fell 19% in August, raising concerns about future supply shortages.
- Critics argue the policy could fuel price growth rather than improve affordability.
Townhouses on the Rise Among First-Home Buyers
Townhomes are increasingly popular with first-home buyers seeking affordability without sacrificing space.
While not offering the full independence of a detached home, townhouses often feature three or more bedrooms, private courtyards, and greater living space than apartments—making them perfect for young families or older first-home buyers planning ahead for children.
According to PropTrack economist Angus Moore, demand is particularly strong among older first-time buyers:
“For some first-home buyers, particularly those that are a bit older… having the extra bedroom and space that a townhouse provides relative to an apartment may be attractive.”
Expanded Home Guarantee Scheme Opens New Doors
The expanded Home Guarantee Scheme has removed income caps and raised property price thresholds, enabling more buyers to purchase with just a 5% deposit.
This expansion is encouraging more Australians to enter the property market — especially families who had previously been priced out. Combined with stamp duty concessions for new builds, the policy is expected to drive a surge in townhouse demand across suburban Melbourne and beyond.
However, critics warn that increased buyer competition may inflate prices further, putting additional pressure on affordability for those still saving for a deposit.
Demand Rising, But Supply Falling
While buyer demand for townhouses is climbing, supply is heading in the opposite direction.
Recent data shows that townhouse approvals dropped 19% month-on-month in August, down to just 2,424 dwellings nationwide. This shortfall raises questions about whether the market can meet the growing appetite among first-home buyers.
What It Means for the Market
Townhouses have become the sweet spot between affordability and practicality, especially for older first-home buyers looking to capitalise on government incentives.
However, without increased townhouse construction, demand may soon outstrip supply, leading to potential price hikes and longer wait times for new developments.
For investors and developers, this could signal an opportunity — but for first-home buyers, it underscores the need to act quickly while the Home Guarantee Scheme remains available.
