Capital cities accounted for 90 percent of apartment approvals in 2016: RBA bulletin

Capital cities accounted for 90 percent of apartment approvals in 2016: RBA bulletin
Staff ReporterJune 28, 2017

In Australia, construction for residential dwellings can be broken down into broad types: detached houses and higher-density dwellings, according to the Australian Bureau of Statistics (ABS).

Detached houses made up nearly three-quarters of the dwelling stock in the 2011 Census, while the second category comprising apartments accounted for about 15 per cent of the dwellings, and ‘semi-detached’ dwellings (such as townhouses, terraces and semi-detached houses) made up for 10 per cent, the RBA said in its latest bulletin.

Capital cities, in particular Sydney, Melbourne and Brisbane, accounted for 90 per cent of apartment approvals in 2016 (Graph 4). 

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By comparison, approvals for detached houses have been more scattered, with about two-thirds of approvals last year located in the capitals, and less than half in the eastern seaboard capitals, said the bulletin.

In the major cities too, apartments have been mostly constructed in the inner and middle suburbs, which are well connected with employment centres and amenities, though the concentration has varied somewhat by city (Graph 5). 

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Meanwhile, new houses were largely built in fringe or outer suburbs of cities.

Of course, the demand for different types of homes depend on various factors such as affordability, location and buyer types and preferences, alongside macroeconomic determinants such as population and employment growth. 

In fact, apartments are typically cheaper than houses with their median price around 30 per cent lower than that for houses, in part because apartments are typically smaller but also because apartments use land more intensively (Graph 6). 

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In recent years, lower relative prices have supported the demand for apartments as land supply constraints in the eastern cities have led to significant land price inflation (the supply of land for detached houses is ultimately more limited relative to that for higher-density dwellings), most notably in Sydney.

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