What Are Terraced Houses—and Are They a Good Buy?
Terraced housing is becoming a familiar sight across New Zealand’s cities and growing suburbs. But for buyers and investors, these modern builds come with both appeal and complexity. So what are terraced houses, and are they a smart investment or first home? Let’s explore the essentials.
What Is a Terraced House?
A terraced house—also known as a row house—is one of a group of attached dwellings that share one or two walls with neighbouring homes. Typically built in uniform rows, these properties maximise land use while maintaining private entrances and often include small courtyards or balconies.
Unlike apartments, terraced houses generally don’t require a body corporate and are often sold as freehold or fee simple titles, meaning you own the house and the land it sits on. With councils promoting medium-density housing and housing intensification rules allowing for more of this type of development, terraced homes are popping up in suburbs all over Auckland, Hamilton, Christchurch and Wellington.
Why Are Terraced Homes Appealing to First Home Buyers?
Affordability is the biggest draw. Terraced houses are often more budget-friendly than traditional standalone homes in the same area because developers can build more of them on the same section. This puts homeownership within reach for buyers who may otherwise be priced out of the market.
Modern build quality also plays a part. Many terraced homes are brand new and built to meet current Healthy Homes Standards. That means good insulation, double glazing, and energy efficiency—things that can save you money and create a better living environment.
Location matters, too. Because terraced housing is often built close to transport links and urban amenities, you get the convenience of city living without the high-end price tag.
Private but compact. Unlike apartments, terraced houses often include a small outdoor space, private entrance, and no shared walls above or below you. That offers the feeling of a standalone home but on a smaller scale—perfect for singles, couples or small families.
Are Terraced Homes a Good Investment Property?
For investors, terraced homes offer several advantages. First, rental demand is strong. These properties appeal to tenants seeking modern, low-maintenance housing near public transport and services. They are ideal for professionals, small families, and downsizers.
Yields are often competitive, especially when purchasing a new build, which allows you to take advantage of favourable lending conditions (such as lower deposit requirements) and often better tax treatment. With 20% deposits usually sufficient for new builds—and sometimes as low as 10%—they are a more accessible starting point than established investment properties which require 30%.
Lower maintenance is another key benefit. Most terraced homes are constructed with modern, durable materials that reduce ongoing repair costs, and many developments are covered by 10-year warranties. This helps keep operating costs down in the crucial early years.
However, due diligence is still critical. Location, developer quality, projected yield, and tenant demand should all be factored into your decision. A poorly located or overpriced terraced property with high holding costs will undermine the benefits.
What to Watch Out For with Terraced Housing
While terraced homes come with a lot of positives, there are also important considerations to keep in mind—whether you’re buying to live in or to rent out.
Soundproofing and Privacy
Shared walls can mean shared noise. The construction quality will determine how much sound carries between homes, so check what materials and techniques have been used. Ask about acoustic insulation and if you can, visit at different times of day to listen for yourself.
Limited Outdoor Space
Many terraced homes offer only a courtyard or small garden. For tenants or buyers used to larger outdoor spaces, this could be a drawback. If you’re targeting families or pet owners, this may impact demand.
Parking
Parking is often limited in terraced housing developments. Some properties come with a garage or off-street park, but others rely on street parking. This can be fine in city-fringe locations with good public transport but may be a sticking point in more suburban areas.
Future Competition
As more terraced homes are built, some areas may become oversaturated. Too much supply in a small area can impact resale value and rental yields. Before buying, research how many similar homes are coming to the market nearby, and how they’re performing.
Residents' Associations or Shared Costs
While most terraced homes aren’t part of a body corporate, some developments include a Residents’ Association that manages shared spaces or services. These usually come with annual fees and specific rules, which you’ll need to review before buying.
Are Terraced Houses Right for You?
Whether you're a first home buyer looking for affordable entry into a high-demand area or an investor seeking strong yields and steady demand, terraced homes can be a great option. They balance cost-effectiveness, practicality and location in a way that appeals to many modern lifestyles.
But, as with all property purchases, the key is to do your homework. Make sure the property suits the area’s rental demand, review the build quality, and understand your obligations if there are shared spaces or costs. Speak to a mortgage adviser early to get your finance in order and understand what you can afford.
Terraced housing may not suit every buyer, but for many Kiwis it represents a smart, flexible step into property ownership or portfolio growth.
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