Australia’s housing approvals have split into two distinct groups in recent months, with free-standing houses and townhouses delivering growth, while flats and apartments experience a slump in approvals. In total, for the year-ended January 2018, Australia’s dwelling approvals fell 3.3%, to an annualized 222,819 separate approvals.
However, on a combined basis, approvals of houses and townhouses grew by 2.4% over the same period, while approvals of flats and townhouses fell 14.2% compared with the prior year.
The first chart details Australia’s total residential dwelling approvals, on a monthly and year-end basis. It includes free-standing house approvals on an annualized basis (the red line).
To go straight to the dashboard and take a closer look at the data, click here.
This chart shows approvals are continuing, and have even grown again, in the last few months, after declining for the year through to mid 2017.
Yet, the real story in Australian dwelling approvals is how the sector has developed into something of a two-speed economy. It has been tempting in the recent past to view the market as operating at three tempos – free-standing houses, townhouses and flats & apartments. They appeared to be operating on different trajectories, and to some extent, that is still the case.
But as the chart below shows, the major divide in the housing market is between the formats experiencing growth and the formats that are currently in decline.
To go straight to the dashboard and take a closer look at the data, click here.
The chart emphasizes the role of free-standing houses, but also shows that approvals of townhouses have also been growing, and growing their market share.
It is plain to see that 4+ Storey Apartment approvals peaked, then declined and in recent months have recovered some of the lost ground, and it is equally plain that with a magnifying glass, we can see the role that flats play in the market.
In the following chart, only the growing formats are displayed.
To go straight to the dashboard and take a closer look at the data, click here.
Over the year to the end of January 2018, these three formats all experienced growth, and combined, they grew from 65.6% of total approvals in the prior year, to 69.6% for the year-ended January.
This is detailed in the table.
| Dwelling Type | YE Jan ‘17 | YE Jan ‘18 | % Change |
| Houses | 117,801 | 118,351 | +0.5% |
| Townhouses (1 Storey) | 8,354 | 10,736 | +28.5% |
| Townhouses (2+ Storeys) | 25,240 | 25,972 | +2.9% |
| Flats (1 or 2 Storey) | 2,670 | 2,168 | -18.8% |
| Flats (3 Storey) | 5,267 | 4,233 | -17.9% |
| Flats (4+ Storey) | 71,004 | 61,269 | -13.7% |
| Total | 230,336 | 222,819 | -3.3% |
All too often, Australia’s housing market is defined as booming or busting based on dwelling prices. That is, at best, somewhat misleading, because there is a limited extent to which the price of transacted houses impacts upon the rate of growth in new dwellings. They are measures of two different things, and we will address housing finance in a separate item.
However, it is true, as The Guardian’s Greg Jericho wrote, that house prices have commenced tracking downwards, following the well-established downturn in prices of apartments and flats.
December quarter 2017 prices rose 1.0%, but that result is near the lowest of any quarter of the last five years. This has flowed through to annualized prices, which are down in almost all capital cities.
So, while there is still some life left in approvals of houses and townhouses, there is evidence approvals may be about to turn down.
