Are Paddington Terraces The Answer To Sydney’s Housing Crisis?

Could terrace housing in the inner east be the solution to Sydney’s housing crisis?

We look at how Paddington’s traditional terrace houses – and the modern townhouses that replicate them – could offer a pattern of development that our city desperately needs.

It’s no secret that Sydney needs more housing in order to address the housing crisis, but there are big differences of opinion over what type and how.

A lot of the discussion—and development—so far has centred on high-rise apartment towers close to train stations or land releases on the outskirts of the city. However, we believe planners and developers should be paying a lot more attention to what’s been dubbed Sydney’s “missing middle.”

In fact, we think the classic Sydney terraces of Paddington, Woollahra, Darlinghurst and Surry Hills could be a big part of the solution to Sydney’s housing crisis.

What is Sydney’s “missing middle”?

Sydney’s “missing middle” refers to the shortage of medium-density homes across our city. We’re talking about terraces, townhouses and semi-detached properties.

While older terraced houses may be common in some of Sydney’s eastern suburbs, such as Paddington, Woollahra, Redfern, Surry Hills and Darlinghurst, other parts of the east don’t have many of them at all.

For example, in Paddington, terraced and semi-detached homes and townhouses comprise 60.5% of dwellings. However, in New South Wales as a whole, they make up just 11.7% of housing stock, while Australia-wide, they’re 12.6%.

This ‘missing middle’ in Sydney’s property stock has been noted for many years now. In most suburbs, medium-density housing options are the least common type of housing, and buyers tend to be forced to choose between freestanding houses or apartments.

We believe this factor needs to be addressed – and late last year, we argued that terraces and townhouses were one type of development we need more of.

Do we need more townhouses and terraces?

We’re certainly not alone in our view.

In 2016, the Planning Institute of Australia highlighted the lack of variety in housing stock right across the country, arguing that many families wanted neither apartment living nor a detached home but something in between.

A year later, PwC released a report noting that Sydney lacked enough medium-density housing to satisfy its growing population, arguing that this ‘missing middle’ should become a greater focus for developers.

More recently, an article by Elizabeth Farrelly in ArchitectureAU argued that Surry Hills and suburbs like it have gone from being slums to being blueprints for future sustainable and healthy economic development. And she made big claims:

“A Surry Hills mix of terrace housing, converted warehouses and the odd low-rise walk-up could hugely increase density while creating cool, walkable streets, decreasing morbidity, cleaning the air and building community.”

There’s no denying that the popularity of many inner-eastern suburbs like Paddington or Surry Hills is due in part to their housing stock of terraces. We think we can learn a lot from this as our city looks to expand and grow.

Who is driving demand for medium-density housing?

Townhouses and terraces are in strong demand across Sydney’s Eastern Suburbs, with record highs being achieved for brand-new boutique luxury townhomes and larger renovated terraces in suburbs such as Paddington.

Downsizers are one of the main buyer groups driving this demand. They also face competition from first home owners, couples and families wanting to upsize from an apartment.

Many downsizers don’t want to move into a large apartment complex. They value space and privacy, particularly since the pandemic hit. However, they want to avoid the cost and upkeep of a large family home.

They’re looking for a low-maintenance ‘lock-up and leave’ lifestyle that’s close to amenities, including restaurants, cafes and public transport.

A terrace or townhouse usually provides a small parcel of land with a street front, front door and privacy. They’re also renowned for their economical layouts and use of space. In a Paddington terrace, for example, you may have around 300 sqm of living space on just 100 sqm of land.

Townhouse vs terrace

It’s worth noting that there are some key differences between terraces and townhouses that have the potential to divide buyers.

Townhouses tend to have been built more recently, so they don’t always have the same character, charm and historic appeal as a row of Paddington’s Victorian-era terrace houses. Townhouses are also typically Strata Title, while older-style terraces are not.

Some buyers won’t like this and will want to avoid the ongoing Strata fees and levies a townhouse may entail. However, these rates pay for common area upkeep and modern communal facilities, which might include lifts, a pool, a gym, tennis courts, and gardens.

There are other benefits to buying a townhouse over a terrace, too.

Like a terrace, a townhouse can offer a low-maintenance lifestyle, with outdoor space consisting of just a courtyard or small garden. Because they’re usually more modern, they also typically come with ample parking and open-plan living.

The challenge

Of course, one challenge in developing townhouses and terraces is that eastern suburbs property tends to be expensive. This means developers often look to maximise the number of dwellings they put on any land.

As a result, without some form of government assistance, any low-scale medium-density developments are likely to be top-end ones, where the value of the dwelling that’s sold is high enough to make a small project viable.

Want more?

Contact our team today to find out more about how we can help you buy and sell in Sydney’s eastern suburbs.