Check out recent auctions and you'll notice more than a few townhouses have sold of late, and at reasonably affordable prices, too. In fact, many go for well below the city's median auction price of $1.15 million, a figure from the Domain Group.

Perhaps with good reason. A full-scale New Year's event is likely to be a squeeze in a townhouse. But a dinner party on the back patio might be ideal.

Sure, townhouses are smaller than typical free-standing homes but they still mimic the floor plan and outdoor space of larger houses to provide a similar lifestyle.

The chief executive of Propertybuyercom.au, Rich Harvey, says townhouses are a good compromise between a house and an apartment.

"As the market slows down and people want to get out of their bigger homes into something smaller and more economical, townhouses are a great opportunity," Harvey says.

"A lot of people travelling up the home ownership tree will start with an apartment. Then a professional single or couple might move into a townhouse. And when they have a kid or two and need space they move into a house."

What's selling

Sure, townhouses aren't always cheap. But they are usually more affordable than most other houses.

Take, for example, this two-bedroom townhouse that recently sold at 3/50 Fennell Street, North Parramatta, for $730,000. It has a sleek interior, complemented by a tiled patio out back with a trim garden.

This two-bedroom townhouse in Parramatta recently sold for $730,000. Photo: Supplied

Even larger townhouses seem more affordable while still being easy to maintain, such as this three-bedroom property at 1/47 Frances Street, Lidcombe, which sold a couple of months ago for $970,000. It has a large paved courtyard and a double lock-up garage in a home that's just 19 kilometres from the central business district.

A buyer on a slightly smaller budget might travel a little further out to say, Revesby, where this two-bedroom townhouse at 1/2a Victoria Street is on the market for $705,000. It has a spacious interior and a covered outdoor deck.

Where else to look

There are sprinklings of townhouses all around Sydney, though they are often tightly held and hard to come by in the inner or middle ring suburbs.

There seem to be more in the south-west and western suburbs at this point, including suburbs like Glenmore Park, Kingswood, Quakers Hill and Blacktown.

This townhouse in Blacktown is for sale. Photo: Supplied

The chief executive of Positive Real Estate, Sam Saggers, says he likes the greater Bankstown area for its range of prices and choices on both new and old townhouses.

Bankstown also happens to boast a young and growing population. Most people in the area are aged 0-14 years, according to the Bureau of Statistics (ABS). This presumably means there are plenty of families around.

Saggers says the preference for less space, even with a family, is making the townhouse an attractive option.

"I think the townhouse is the future of real estate and will support growing families," he says.

A good investment?

Of course, investing in a townhouse as opposed to living in it requires some additional study.

The founder of Destiny Financial Solutions, Margaret Lomas, says that if you're buying a townhouse purely as an investment, you should always research local demographics and buy the property type most in demand.

"Once you narrow down an area that has good growth drivers, don't buy a townhouse instead of a house just because it seems like the cheaper option," Lomas says.

"In many areas there may not be demand for townhouses and if you buy one to get into the market, it could be that demand from tenants just isn't there. Ultimately this impacts on your resale."