Houses vs. Townhouses vs. Apartments. Which Goes Up In Value Faster?

Ed McKnight

Ed McKnight

Economist, property investor and host of the Property Academy Podcast

What Goes Up In Value Quicker – Houses, Townhouses or Apartments?

Scrolling through Facebook a few weeks back, a post came up in my newsfeed that grabbed my attention.

It was from the NZ Property Investors Chat Group, a Facebook group where investors quiz each other about real estate.

One Taupo based property investor asked: “I’m looking at investing in a townhouse, but is it going to go up in value as quickly as an apartment or a standalone house?”

As can be expected on social media, a chorus of property investors quickly chimed in. In this case, they were singing the age-old advice that houses appreciate in value the fastest, followed by townhouses and then apartments.

That’s what’s typically been said in property investor circles. But is it true?

That's what we're going to answer in this article.


The traditional thinking in property investment is that increases in property values are tied to increases in the value of the land. If that's true, then houses should increase in value faster than townhouses, and townhouses faster than apartments.

But that raises two questions:

  1. Is it true?
  2. And if it is true, is the difference in capital growth meaningful enough to pay attention to?

‘Not always’ is the answer to both questions according to data released to Opes by property data firm, CoreLogic.

Apartments v.s. Townhouses and Houses

Apartments v.s. Townhouses and Houses

The data does show that apartments have historically grown in value more slowly than townhouses and standalone houses in the country’s 3 major cities.

2 bedroom apartments in Wellington appreciated at an average of 5.37% per year between January 2000 and July 2020.

Over the same period, 2-bed flats and townhouses appreciated at 6.72% annually, while 2-bed standalone houses appreciated at 6.63% each year on average.

The trend of apartments appreciating more slowly than other building types is seen across all number of bedrooms in the three major centres, with only one small exception.

That leads us to question the size of the difference.

When apartments are compared with standalone houses with the same number of bedrooms (i.e. 2-bed apartments v.s. 2-bed houses), the difference in capital growth has historically been between 15-49% less growth per year.

Townhouses v.s. Houses

Townhouses v.s. Houses

But when comparing townhouses and standalone houses, the trend isn’t as straightforward for several reasons.

The first is that data companies collect information about individual properties from district and city councils. There are 67 of these territorial authorities throughout the country.

The issue here is that there is no consistent method that councils use to classify buildings. A townhouse could be called a unit, a flat, a townhouse, or a residential dwelling within different council systems.

In our simplified data set, the results are presented at “flats” and “residential dwellings”. That means there could be some cross over, where a townhouse is sometimes recorded as a “flat” and in other times as a “residential dwelling”. This makes it harder to draw reliable conclusions.

Putting that aside, for the purpose of this analysis, we’ll call “flats” townhouses and “residential dwellings” standalone houses.

Even so, the second factor making it tough to draw a conclusion in the ‘townhouses v.s. standalone houses’ showdown is that in some instances “flats” achieved higher annual capital growth than houses.

Over the last 20 years, this has been the case for 2-bed flats in Hamilton, 2-bed flats in Wellington and both 3 and 4-bed flats in Christchurch.

In the instances where standalone houses achieved higher capital growth, the difference is sometimes marginal, and certainly less consistent than the trends we observed for apartments.

Take 4-bed ‘flats’ in Auckland as an example, which over the period increased in value by 7.08% per year on average. That compares to 7.47% for 4 bed ‘residential dwellings’.

While these 4-bed Auckland-based flats achieved 5.2% less annual growth than residential dwellings, the growth gap is significantly smaller than the 14.6% gap that was the case for 4-bed apartments during the same period.

So we can confidently say that apartments achieve lower capital growth than townhouses and standalone houses. But, we can’t be as confident in declaring a winner between standalone houses and townhouses.

The real message here is that, although received wisdom in property investment and other fields may sound logical on first hearing – that doesn’t mean it’s accurate.

A mate in the pub or a friend on Facebook may strongly assert something to be the case. But, it doesn’t mean it’s true.

Ed McKnight

Ed McKnight

Ed McKnight is the host of the Property Academy Podcast – NZ's #1 business podcast. He is an economist, having studied at the University of Auckland and the University of Waikato. He's a frequent writer for Informed Investor Magazine and has contributed to NewsHub, Stuff, OneRoof and Property Investor Magazine.