Houses, townhouses, or apartments: Which should you buy?
Anyone who tells you houses always win, or townhouses are the smart entry point, or apartments are a trap, is skipping the actual work of weighing the key facts against each other.
The immediate answer: there's no single best property type.
There are several key characteristics to compare:
Capital growth
Rental yield
Holding costs
Each property type trades these off differently, and the right one depends on what you're actually trying to achieve, not which type sounds most impressive when you’re talking to your friends.
Here's how the three compare, in the new build space specifically.
Houses
The case for.
Standalone houses have historically shown the strongest long-term capital growth of the three types, averaged across the market over long periods, which is why they're often treated as the default investment type.
They typically come with freehold (fee simple) title, giving full ownership of land and dwelling with the widest bank and buyer acceptance, no body corporate, no shared decision-making, and generally the strongest resale demand of the three.
The case against.
That growth advantage often comes at a cost. Houses usually carry the highest purchase price of the three, which weighs on both your deposit requirement and your ongoing mortgage cost, and typically deliver the weakest gross yield relative to price. That combination often means the largest gap between rent and holding costs, more capital tied up per property, and a narrower pool of both tenants and future buyers at the higher end of the price range, which can mean thinner liquidity if you need to sell.
Townhouses
The case for.
Townhouses tend to sit in the middle on most measures, which is a strength rather than a compromise. A lower purchase price than an equivalent house widens the tenant and buyer pool considerably, generally supports a stronger yield, and makes serviceability better, which matters if you're trying to build toward a second or third property rather than commit everything to one asset.
Land content is smaller than a house but larger than an apartment, and townhouses have historically outperformed apartments on long-term capital growth, while trailing standalone houses.
The case against.
Growth has historically lagged houses as a category (albeit not by much), and townhouse supply can be added relatively quickly in many locations, more of them can generally be built faster than standalone houses in an established suburb, which can cap how far prices run ahead of demand.
Title type varies: most are freehold, but unit title is also used, especially where medium-density zoning applies. Townhouses can also have residents association fees which can impact your cashflow, although this is case by case depending on the project.
Apartments
The case for.
Generally the lowest entry price of the three, which typically produces the strongest gross yield. In well-located, high-demand areas, apartments can offer strong liquidity, plenty of comparable sales and consistent transaction volume, since there are simply more of them changing hands.
The case against.
Apartments have historically shown the weakest long-term capital growth of the three categories in New Zealand, averaged across the market. They're almost always unit titles, which means body corporate levies, shared decision-making on building, and less individual control than the other two types.
Bank lending criteria can also be more conservative for apartments, particularly smaller units, which is worth checking with a mortgage broker before you get attached to a specific property.
What are holding costs, and why do they differ so much by property type?
Holding costs are everything it actually costs to own a property week to week, beyond the mortgage itself:
Mortgage
Rates
Insurance
Property management
Ongoing maintenance
And, where applicable, body corporate or resident association levies
Holding cost is the number that turns a headline gross yield into the real, net cost or return of owning a specific property, and they're also where houses, townhouses, and apartments diverge the most from each other.
A standalone house on a freehold title typically carries the simplest holding cost structure: mortgage, rates, insurance, and maintenance, with no body corporate or shared levies to budget for.
A townhouse might carry a resident association fee, contributing to shared reserves, landscaping, or communal facilities, on top of the same base costs.
An apartment on a unit title almost always carries a body corporate levy, and this is often quite a substantial fee since it covers shared building insurance, lift maintenance, common area upkeep, and building management, costs a standalone house simply doesn't have.
None of this makes one property type better or worse on its own. It means the same purchase price and the same gross yield can produce different net cashflow depending on which type you're looking at.
How the trade-off actually plays out
Houses lead on long-term growth and simplicity of holding costs, and trail on price accessibility and yield.
Apartments lead on yield and entry price, and trail on long-term growth and holding cost simplicity.
Townhouses sit between the two on most measures, which is exactly why they've become a common entry point and a common portfolio-building tool, without being automatically the "correct" choice for every investor.
This is also why concentrating everything in one large house, or spreading capital across several smaller townhouses or apartments, is a different strategic decision, not just a difference in taste.
Key Takeaways
Houses have historically led on long-term capital growth and carry the simplest holding cost structure, but come with the highest price, weakest yield, and narrowest buyer pool of the three.
Townhouses sit in the middle on most measures, wider tenant and buyer pool, stronger yield and serviceability than houses, historically stronger growth than apartments, but title type and resident association fees vary and need checking property by property.
Apartments can offer the lowest entry price and typically the strongest yield, but have historically shown the weakest long-term growth and almost always carry body corporate levies.
Holding costs, rates, insurance, maintenance, and any body corporate or resident association levies, are what turn a headline yield into real net cashflow, and they differ by property type.
There's no universally correct type. The right one depends on whether you're prioritising growth, cashflow, or scaling a portfolio at this point in time.
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Common questions about capital growth:
What are holding costs in real estate?
Holding costs are the ongoing expenses of owning a property beyond the mortgage itself, typically rates, insurance, property management fees, maintenance, and body corporate or resident association levies. They determine the real, net cost or return of owning a property, which is often very different from the headline gross yield advertised at purchase.
Is a house, townhouse, or apartment the best investment in NZ?
There's no single best type. Houses have historically shown the strongest long-term capital growth but come with the highest price and weakest yield. Apartments offer the lowest entry price and typically the strongest yield but have historically shown the weakest long-term growth. Townhouses generally sit between the two. The right choice depends on your strategy, whether you're prioritising growth, cashflow, or building a portfolio across multiple properties.
Why do apartments have higher holding costs than houses?
Apartments are almost always held on unit title, which requires a body corporate levy covering shared building insurance, lift maintenance, common area upkeep, and building management. A standalone house on freehold title has none of these shared costs, only rates, insurance, and its own maintenance, which is why apartments often carry the highest holding costs of the three property types despite typically having the lowest purchase price.
Do townhouses have body corporate fees?
It depends on the title type. Some townhouses are freehold with no body corporate involved, while others are held on unit title or come with a resident association fee covering shared reserves, landscaping, or communal facilities. This varies by development, so it's worth confirming the specific title type and any associated levies for a given property rather than assuming based on the property type alone.
