Low apartment approvals hindering housing goals
The volatile nature of apartment approvals is continuing to hindering the national housing target to build 1.2 million new well‑located homes over five years.
The number of dwellings approved fell 6.1 per cent in August to 13,991, after an 11 per cent rise in July, according to data released by the ABS.
The decline was fuelled by a 16.5 per cent fall in approvals for private dwellings excluding houses (such as townhouses and apartments), to be 6.1 per cent lower than one year ago.
This was mainly driven by a decline in high-density apartment approvals. There were 1,214 apartments approved in nine or more storey blocks in August, down from 2,504 in July.
Matthew Kandelaars, Property Council Group Executive Policy and Advocacy, said it is disappointing to see the number of approvals go backwards after growth in July.
“We need to increase the number of homes approved and ensure a strong pipeline of apartment supply, to drive towards our housing targets at scale,” Kandelaars said.
“But the reality is that it has never been more difficult and costly to get apartments out of the ground.
“Apartment-killer taxes and planning systems continue to stall housing supply at a time when we can least afford it.
“Over the past year, we approved nearly 9,000 fewer apartments and townhouses across the country than the in preceding 12-month period. We need that number to increase month on month to build the homes Australians need."
In New South Wales, approvals declined by 14 per cent over the 12 months to August 2024 to just 42,400. They are now 45 per cent below their September peak.
“The decline in approvals is a warning that the path to reach our state’s housing targets is getting steeper by the month,” said Stuart Ayres, CEO, of UDIA NSW.
This pressure continues to be felt across the whole state, and across all dwelling types. As UDIA NSW analysis shows, all typologies reported an annual decline, with apartments again showing the most dramatic of declines of 30 per cent over the last twelve months to just 10,300 approvals.
Source ABS: UDIA NSW
UDIA says it is continuing to advocate for more action to speed up the delivery of housing, including the Government adopting key recommendations made in the Productivity and Equality Commission’s Review of Housing Supply Challenges and Policy Options for New South Wales. The report called out the challenges of development feasibility, construction sector capacity, and a slow and inefficient planning system, which are all constraining the delivery of new housing.
The Productivity Commissioner’s report makes some common-sense recommendations that can unlock more housing supply more quickly and help us chart a course to deliver our housing targets.
The Commissioner confirmed the findings of UDIA’s recent. Making TODs Work research found that mid-rise apartment projects are largely unfeasible in most parts of Sydney and recommended a further increase in densities around the announced TOD sites, expanding them to 800m and adding more locations to the program.
“Doubling the permissible floor space ratio in the TOD 2 sites and greatly increasing density in other areas which are already zoned for high-density apartments will significantly increase the capacity of the industry to deliver housing," Stuart Ayres added.
Ayres also says an upfront Government investment now will be recouped through future developer contributions and state revenue like stamp duty, land tax and payroll taxes, which are only paid to the Government when new homes are built.
"The current business-as-usual approach of waiting years for developer contributions to accumulate, before there is enough available to start funding a handful of these housing-enabling projects, is clearly not delivering homes at the speed that communities need them.
