In the 1850s, a new kind of architecture started cropping up in Australian cities. Inspired by the elegant homes people saw on journeys to London and Paris, they began building terrace houses—stucco-clad dwellings recognizable for their cast iron balustrades.

Today, these charming historic homes are highly sought after for their distinct character. But for Damien Abicic, principal architect at Sydney’s Pivot Studio, they’re also a bit of a headache. He’s modernized many terrace homes, and there are always plenty of hoops held up by conservative planning authorities to jump through—though if his latest project is any indication, he’s pretty good at it.

“Creating something new while maintaining a relationship to the context is the challenge and sometimes the inspiration, as it was for this home,” Abicic explains of the terrace house in the Sydney suburb of Alexandria that he renovated last year for just under $152,000. The architect preserved the 1,150-square-foot structure’s original exterior while gutting and rebuilding the interior, which was too far deteriorated to save anyway. The result is a uniquely contemporary two-story home that honors Australia’s rich past while fully embracing the present.

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Renovated 19th-Century Terrace House Merges with the Outdoors