Which has the higher rental yield, a townhouse or an apartment?

No published source gives townhouse yields. Cotality's October 2026 report shows units with the higher gross yield in every capital, at 4.7% against 3.4% for houses across the combined capitals. A townhouse could sit between those figures or outside them, so check the actual rent and price.

Do apartments or townhouses hold value better in a falling market?

In the 12 months to September 2026, unit values fell less than house values in Sydney (3.8% against 8.2%) and Melbourne (3.8% against 7.3%), while in Brisbane units rose more (8.5% against 5.3%). Cotality does not report townhouses separately, and one 12-month period does not predict the next.

Are strata costs higher for apartments?

None of the sources used here gives a general comparison. Levies depend on the scheme's size, facilities, insurance and maintenance plan, so the levy history and capital works plan in the strata records show the real position for each property.

Does a new townhouse or apartment get better tax treatment than an older one?

Under the 2026 reforms, new builds keep negative gearing and can choose the 50% capital gains tax discount. Buyers of established dwellings after 12 May 2026 do not keep both. Whether a given dwelling counts as new depends on the final definition.

Townhouse or apartment as an investment: what is different?

For an investor the main differences are usually how much land comes with the property, what it costs to buy, how much shared building the owner pays to maintain and insure, and who rents it. Published data does not separate townhouses, so the closest comparison is Cotality's "houses" and "units" figures, where units had the higher gross yield and the lower median value in every capital city in October 2026.

Cotality's Home Value Index reports houses and units only. It does not publish townhouse figures or say where townhouses fall, so treat the table below as the two ends of a range, not as townhouse results.

Checked October 2026. Rules, rates and prices change, so confirm anything that matters with the source linked below.

What the October 2026 figures show

Cotality's report covers results to 30 September 2026. Across the combined capitals, the median house value was $1,103,201 and the median unit value was $738,778. The gross yield was 3.4% for houses and 4.7% for units.

Capital	Median value, houses / units	Annual value change, houses / units	Gross yield, houses / units
Sydney	$1,466,060 / $867,597	-8.2% / -3.8%	3.0% / 4.4%
Melbourne	$915,119 / $624,740	-7.3% / -3.8%	3.5% / 5.2%
Brisbane	$1,146,078 / $834,627	5.3% / 8.5%	3.4% / 4.2%
Adelaide	$990,531 / $674,188	6.5% / 6.2%	3.5% / 4.5%
Perth	$1,017,734 / $714,265	10.0% / 10.5%	3.9% / 5.2%
Canberra	$1,006,269 / $582,245	-1.5% / -2.1%	4.0% / 5.5%

Over a single year the pattern is mixed. Units fell by less than houses in Sydney and Melbourne and rose by more in Brisbane and Perth, but houses did better in Adelaide and Canberra. One 12-month period says little about the next, and nothing here forecasts townhouse results.

Browse new townhouses

See the townhouse developments selling now, with bedrooms, prices and completion dates, city by city.

Land and what drives value

Cotality says its index prices attributes such as bedrooms, bathrooms, land area and location. A townhouse on its own lot comes with a private parcel of land, while an apartment owner holds a lot inside a building plus a share of the common property. The townhouse versus apartment guide covers living differences, and the strata versus Torrens title guide explains how title changes what an owner holds.

For tax, the ATO's capital works deduction is worked out on the construction cost of the building rather than the purchase price. How the price splits between building and land therefore affects the size of the deduction, and the depreciation guide shows how.

Strata costs and insurance

Both property types can sit in a scheme with levies, but the shape of the costs can differ.

Victoria: Consumer Affairs Victoria says an owners corporation must hold reinstatement and replacement insurance for buildings on common property, plus public liability cover of at least $20 million for the common property. Insurance for all lots is required where any lot sits above or below another lot or common property, with exceptions such as single-storey lots, and a two-lot subdivision does not have to take out the common property cover. Ask for the scheme's insurance details and check them with a conveyancer.
New South Wales: the owners corporation must hold building insurance and public liability cover of at least $20 million. A two-lot scheme in physically detached buildings can vote unanimously not to hold building insurance if other conditions are met. NSW also says a strata information certificate shows levies and capital works proposals from the 10-year plan.
Queensland: the Queensland Government says the body corporate must insure common property and some buildings, with the detail in the Body Corporate and Community Management Act 1997 and the scheme's regulation module, so the body corporate's current policy and insurance certificate are the places to check.

Levy levels depend on the scheme's size, its facilities and its repair needs, so the levies of the actual scheme are what count. See townhouse body corporate fees and what strata insurance covers.

Tenant demand and vacancy

Cotality says, anecdotally, that renters are looking for any way to minimise rental costs, such as larger households, multi-generational housing or smaller or more distant rentals. It puts the annual change in national rents at 5.5%, and the national vacancy rate was 2.0% in September 2026, up from a record low of 1.5% in February 2026. Rents for a specific type of property are best checked with a local property manager.

Demand for a specific building depends on its suburb, its distance to transport and work, and how many similar properties are for rent at the same time. A local property manager can show current listings and rents.

Tax rules that apply to both

For an ordinary residential rental, the ATO's capital works and depreciation rules turn on when the building was built and whether the assets are new or second-hand. The 2026 negative gearing and capital gains tax changes starting 1 July 2027 turn on whether a dwelling is a new build. The Budget explainer lists a newly constructed apartment bought off the plan and a duplex built after knocking down a single free-standing house as eligible new builds, does not list a townhouse example, and says later purchasers of the same dwelling are not eligible. Treasury's August 2026 exposure draft on the detailed definition was not law as at October 2026.

Common questions

Which has the higher rental yield, a townhouse or an apartment?: No published source gives townhouse yields. Cotality's October 2026 report shows units with the higher gross yield in every capital, at 4.7% against 3.4% for houses across the combined capitals. A townhouse could sit between those figures or outside them, so check the actual rent and price.
Do apartments or townhouses hold value better in a falling market?: In the 12 months to September 2026, unit values fell less than house values in Sydney (3.8% against 8.2%) and Melbourne (3.8% against 7.3%), while in Brisbane units rose more (8.5% against 5.3%). Cotality does not report townhouses separately, and one 12-month period does not predict the next.
Are strata costs higher for apartments?: None of the sources used here gives a general comparison. Levies depend on the scheme's size, facilities, insurance and maintenance plan, so the levy history and capital works plan in the strata records show the real position for each property.
Does a new townhouse or apartment get better tax treatment than an older one?: Under the 2026 reforms, new builds keep negative gearing and can choose the 50% capital gains tax discount. Buyers of established dwellings after 12 May 2026 do not keep both. Whether a given dwelling counts as new depends on the final definition.

Keep reading

Sources

This is general information, not financial, tax or legal advice. Get advice that suits your situation before you buy.