Australia’s housing debate has rarely been more urgent. The National Housing Supply and Affordability Council forecasts the country could fall around 262,000 homes short of housing needs by 2029, underscoring the scale of the challenge facing planners, governments and developers.¹
In response, much of the conversation has focused on high-density towers around transport corridors and strategic centres.
Yet another housing form is quietly returning to the spotlight.
Across Sydney’s Inner West and established suburbs, architects and developers are revisiting the terrace – not simply as a nostalgic reference to the past, but as a housing model capable of supporting the city’s next phase of growth.
For generations, terraces have been part of Sydney’s urban fabric. From Paddington and Surry Hills to Glebe and Annandale, rows of terrace homes have shaped neighbourhood streets while offering a form of housing that sits between detached houses and apartments.
“If Sydney is going to grow well, it can’t rely on towers alone,” says Joe Nahas, Managing Director of Coronation Property.
“Terraces represent one of the city’s most intelligent housing models. They deliver density without losing the human scale that makes neighbourhoods liveable. In many ways, they provide a bridge between the Sydney we know and the Sydney we need to build.”
While the terrace may be one of Sydney’s oldest housing forms, its renewed relevance reflects a broader shift in how the city is approaching density.
A different kind of density
As Sydney continues to grow, planners are increasingly focused on housing diversity: delivering a mix of housing forms that can accommodate population growth while maintaining the character of established neighbourhoods.
High-rise development remains essential in strategic centres and transport corridors. But urban designers are also recognising the importance of medium-scale housing that can integrate more naturally into existing suburbs.
For Coronation’s Head of Urban Transformations, Aras Labutis, terraces form an important part of that broader housing mix.
“Cities evolve through housing that sits comfortably within established neighbourhoods, and terraces are a good example of that,” Aras says.
“They introduce another layer of density that integrates naturally with existing streets while contributing to the long-term evolution of the city.”
Reinterpreting a classic typology
For architects, the terrace presents a familiar framework that can be adapted to contemporary lifestyles.
Rather than replicating historic terrace rows, many new projects reinterpret the typology through modern materials, improved environmental performance and stronger connections to landscape and communal spaces.
At Ashbury Terraces in Sydney’s Inner West, architecture practice SJB explored how the traditional terrace form could evolve within a contemporary residential community.
Adam Haddow, Director at SJB, says the project focused on reinterpreting a familiar housing type for modern living.
“The terrace is one of Sydney’s most familiar housing forms, so our approach at Ashbury was to reinterpret that typology in a contemporary way,” Adam says.
"The homes are designed to sit comfortably within the existing neighbourhood while introducing more light, landscape and shared spaces that support modern living.”
Ashbury Terraces brings together a mix of terraces, apartments and penthouses within a series of low-rise buildings, integrating contemporary architecture with resident amenity and landscaped communal spaces.
The development has also received international recognition, recently receiving recognition at the 2026 Better Future World Design Awards, acknowledging its architectural clarity and thoughtful response to the surrounding suburban context.
A different perspective on terrace living
For some buyers, the appeal of terrace living extends beyond traditional expectations.
Sweta, a resident at Ashbury Terraces, chose a terrace as a single buyer, drawn to its flexibility and long-term appeal.
“As a single buyer, it might seem surprising that I chose a terrace over an apartment, but I was thinking long term,” Sweta says.
“The terraces are incredibly versatile, catering to a range of lifestyles while still offering the space and privacy of a house.”
For Sweta, the multi-level layout offers a level of functionality that goes beyond apartment living.
“Having a separate living area from the bedroom and home office makes everyday living feel both functional and comfortable,” she says.
“When friends and family come to visit, the layout gives a sense of privacy while still feeling open and spacious.”
Her terrace also supports a lifestyle centred around connection.
“I love entertaining, and the courtyard is ideal for relaxed weekend drinks with friends,” she says.
“I tend to use each level differently throughout the day – it creates a natural rhythm between work, downtime and entertaining, which I didn’t have in apartment living.”
Beyond the home itself, location has also played a key role.
“I love that it’s set within a leafy suburb while still being close to everything the Inner West has to offer,” she says.
Contemporary terraces across the Inner West
Ashbury is not the only project exploring the terrace typology in new ways.
Across Sydney’s Inner West, architects are revisiting the form through contemporary design approaches that respond to the fine-grain character of established neighbourhoods.
At Lillian in Erskineville, terraces by Silvester Fuller sit alongside the Ashmore Collection villas by Architecture AND, each offering a contemporary interpretation of terrace living while responding to the rhythm and scale of the surrounding streets.
Together, these projects demonstrate how terraces can adapt to different neighbourhood contexts while retaining the qualities that have made them such a durable part of Sydney’s housing landscape.
Rediscovering a familiar model
While the terrace is one of Sydney’s most recognisable housing forms, its renewed relevance reflects a broader shift in how the city is approaching urban growth.
Rather than relying on a single development model, the future of housing is increasingly defined by diversity: a mix of apartments, terraces and other medium-density housing that respond to different neighbourhood contexts.
For developers, architects and planners alike, terraces offer a framework that is both familiar and adaptable.
In that sense, the return of the terrace is less about nostalgia and more about rediscovering a housing typology that has long been part of Sydney’s identity and reimagining it for the city’s future.
Explore the projects
To learn more about how contemporary terrace living is being reinterpreted in Sydney’s Inner West, explore Ashbury Terraces and Lillian Residences.
