Update: Wollongong police are investigating the circumstances around a unit fire in Fairy Meadow on Wednesday morning.
Anyone with information is asked to contact Crime Stoppers.
The "boarded up" townhouse has now been handed back to the Department of Housing, a police spokeswoman said.
No persons were injured during the fire.
Earlier: Authorities have confirmed no-one was inside a townhouse which was completely destroyed by fire in Fairy Meadow Wednesday morning.
Emergency services were called to a Daisy Street unit complex which borders Aldi around 5:20am. There they found a "boarded up" two-storey brick and tile home well alight.
From the scene, Fire and Rescue NSW Inspector Jay Bland said all residents of the 28-unit complex were initially evacuated. While the adjoining townhouse resident self evacuated, as the property also sustained minor damage.
"Upon arrival crews were confronted with a structural fire in a villa that had breached the roof," he told the Mercury.
"The difficulty with this job was that it was boarded up and so gaining access was really difficult."
Inspector Bland said the blaze was too ferocious for firefighters to conduct an extensive search when arriving on scene.
"The intensity of the fire and the structural collapse that was involved meant that we went into defensive operations," he said.
It has since been given the "all clear" that no-one was inside at the time.
Residents were eventually allowed back into their homes, however the direct neighbour needed to find alternate accommodation.
Twenty firefighters from four different stations attended the blaze - including heavy rescue, mainly attacking the fire from the carpark of Aldi, on Elliotts Road.
They were able to contain the blaze within an hour thanks to favourable weather conditions.
"If we'd got the winds that we've had over the last few weeks, if we'd had those same conditions, this would have been a completely different job and would have impacted on more properties and would have impacted on lives as well," Inspector Bland said.
"It's been a very rapid knock-down by the firefighters."
Nearby resident Daniel Nesbitt said he was woken by sirens so went outside to see the unit alight, with "sounds of crackling wood".
The cause of the fire is still to be determined.
Officers from Wollongong Police District were also in attendance, and investigating the circumstances around it.