Latest dwelling approvals data shows what most in the building supplies sectors already know – Victoria has been experiencing record approvals levels over the last year. For the year-ended June, approvals totalled a mighty 74,316 units, up 15.7% on the prior year. Over the border, approvals in New South Wales declined 2.0% to 71,498 units.
As the chart below shows, the two most populous states continue to dominate dwelling approvals. However, it is clear that the population growth being experienced by Victoria (largely fuelled by net migration from other states), has driven the almost 16% increase in dwelling approvals.
To go straight to the dashboard and take a closer look at the data, click here.
Conversely, approvals in New South Wales are lower, but by a relatively modest 2.0%. Again, this appears to be population related, but more significantly, may be fuelled by the high cost of land and the ‘lumpiness’ of land releases in some areas of Sydney.
It is worth noting that although the Queensland population is also growing, its dwelling approvals slipped 1.5% over the year-ended June, to 42,484 units. This is somewhat more challenging data to comprehend, but it may be that there are timing issues associated with land releases and specific development approvals for large groups of apartments (think of the Gold Coast) can skew the data from one period to the next.
Returning to Victoria, it is relevant to consider what formats of housing are driving the very string growth. The chart below provides a clear indication that there has been solid growth in free-standing dwelling approvals (the blue-bars and the red line), but it is also clear that total approvals have, on a year-end basis, increased more rapidly than houses alone.
To go straight to the dashboard and take a closer look at the data, click here.
We will examine this further in a moment, but it is also worth noting that one factor that may be driving the big lift in dwelling approvals in Victoria is that supply appears to be reaching up to meet demand, after a short period in which annual dwelling approvals actually declined.
For the two years up to around September 2017, Victoria’s dwelling approvals were softening, and fell as low as 63,839 units for the year-ended September 2017, before approvals really began to kick up again. Across Australia, we know that supply rose up to meet demand and bring housing supply to equilibrium some time in mid-2017. But the State-by-State experience was never going to be uniform. Over-supply in WA (and maybe Queensland) offset under-supply in Victoria possibly.
So, we know that free-standing house approvals have grown in Victoria, but we need to look at that in context of all dwelling types, as the next chart shows.
To go straight to the dashboard and take a closer look at the data, click here.
It is now we can see that while houses have grown (by 10.4%) over the year-ended June, that other housing formats have performed much better, as the table below demonstrates.
| Description | YE Jun ‘17 | YE Jun ‘18 | % Change |
| Houses | 35884 | 39603 | 10.4 |
| Semi-detached, 1 storey | 1730 | 2026 | 17.1 |
| Semi-detached, 2 or | 9663 | 11494 | 18.9 |
| Flats 1 or 2 storey | 536 | 434 | -19.0 |
| Flats 3 storey | 1506 | 1155 | -23.3 |
| Flats 4+ Storey | 15684 | 20680 | 31.9 |
The solid growth in Semi-detached dwelling approvals (Townhouses essentially) is good news for the forestry and wood products sectors, with these dwellings typically using more wood products than other multi-residential formats. Combined, for the year-ended June 2017, Houses and Townhouses accounted for 71.5% of Victoria’s total dwelling approvals.
On face, it might seem that Victoria’s 4+ Storey renaissance – the growth of 31.9% in approvals is remarkable in a market supposedly in decline – is all about massive apartment towers. However, that does not appear to be the case, with an increasing representation of mid-rise dwelling approvals, especially in and around Melbourne’s fringes.
