Increasing concerns about the strength of the investor element of the domestic housing market have dominated debate in recent months with major banks announcing a curtailing of policy settings that encourage further lending to investors. To some extent, these comments have dwarfed the major story. Australia’s housing approvals are at record levels, recording an 11.2% increase for the year-ended March 2015, compared with the prior year.
This is displayed in the following chart.
Residential dwelling approvals for the year ended March 2015 totalled 208,420, with free-standing dwellings (houses) and apartments of four or more storeys continuing their dominant position. House approvals totaled 114,646 or 55.0% of the total, growing a solid 9.0% compared with the prior year.
Apartments in buildings of four or more storeys totaled 56,692 approvals or 27.2% of the total, growing at a very strong 20.6% compared with the prior year.
There is plenty of noise about new apartments in large buildings coming on line at an unsustainable pace and fuelling a foreign investment boom. The data tells the story. Although its true that they are growing their share, the growth is not as startling as might first be thought. For the year ended March 2014, approvals of these apartments accounted for 25.0% of the total, but were 10,000 approvals lower than for the same period in 2015. Four or more storey apartments have grown their market share by 2.2% from 25% year-end March 2014 to 27.2% year-end March 2015.
It is important to note that the market-share of free-standing house approvals declined modestly from the prior year. Their share was 56.1% year-ended March 2014. Although their share was down 1.1% for the year ended March 2015 there were 9,500 more approvals than a year before.
Thus, approvals of apartments in four or more storey blocks are, in the main, winning market share from smaller blocks of apartments. The table below, assembled from data on the FWPA Data Dashboard shows how the smaller apartments and flats have fared over the most recent full-year periods.
| Dwelling Type | Total YE Mar’14 | Total YE Mar’15 | % Change YoY | YE Mar ’15 Share |
| Semi-Detached 1 Storey | 10,095 | 8,749 | -13.3 | 4.2% |
| Semi-Detached 2+ Storey | 14,812 | 17,121 | 18.7 | 8.2% |
| Flats 1or 2 Storey | 5,310 | 5,486 | 3.3 | 2.6% |
| Flats 3 Storey | 5,134 | 5,726 | 11.5 | 2.7% |
| Apartments of 4 or more storeys | 46,992 | 56,692 | 20.6 | 27.2% |
Combined, for the year to the end of March 2015, smaller blocks of apartments and flats accounted for 17.7% of total approvals, significantly less than the 27.2% share held by four or more story apartments. The influence of the smaller blocks is slowly declining as lifestyle choices move more and more people into larger apartment buildings.
Yet, some are still growing very strongly, in particular Semi-Detached 2+ Storey apartments, which includes town-houses. Their growth is important because it speaks to the changing nature of living in suburbs and urban fringes in Australia and of course, includes a significant proportion of timber-framed construction.
While the growth in Apartments of 4 or more storeys is significant and is clearly leading the market, growth in townhouses and even in free-standing houses remains significant.
Record housing approvals look set to continue into the medium term future. Despite the debates, some warranted and some perhaps a little hysterical, the role of free-standing houses will remain the dominant force in the Australian residential landscape for years to come.
With much of the concern about the overheated investor market centered around Sydney, it is useful to see what is occurring with residential approvals in New South Wales. For the year-ended March 2015, total dwelling approvals were 54,328, up 5.4% on the prior corresponding period.
Of interest is that house approvals grew a very strong 11.8% over the period, accounting for 45.0% of total dwelling approvals. Sydney and Melbourne have long dominated the multi-storey apartment boom and New South Wales has consequently seen houses account for less than half of all residential dwelling approvals for some years.
Perhaps of greatest interest in New South Wales, is that compared to the year-ended March 2014, four or more storey apartment approvals declined 2.3% for the year to the end of March 2015. As Statistics Count has discussed previously, approvals of apartments in large complexes are done as a whole complex and so the data can be patchy, with large increases in single months. Over a full year, what can be observed in New South Wales, is that investment booms are not all about new apartments.
