Building approvals for higher-density homes inclusive of apartments and townhouses fell again over 2020 - the fifth consecutive year of declining development with no prospect of a sustained revival inactivity.
Significant government stimulus initiatives specifically directed at the housebuilding sector have resulted in a surge in planned construction.
However higher-density development approvals clearly remain subdued by comparison, accounting for just 34.7% of total home building approvals - the lowest market share since 2010.
Townhouse construction continues to outperform units, reporting a slight increase in annual activity, with a 42.7% market share of overall higher-density development- the highest proportion for 11 years.
All capitals reported declines in building approvals for units over 2020, with Adelaide and Perth the clear underperformers.
Brisbane and Melbourne recorded high levels of planned townhouse development over 2020 with Sydney stable.
National townhouse building approvals continue to outperform units, with an annual increase of 1.7% over 2020.
Brisbane has clearly been the top townhouse performer rising by 31.7% with Melbourne higher by 7.1% and Sydney steady over 2020 compared to 2019.
Sydney reported an average per townhouse building cost of $335,145 over 2020 that was an annual increase of 5.0%, with Melbourne at $341,242 - up 1.3%, Brisbane $232,862 – down 0.7%, Adelaide $248,222 - up 7.4%, and Perth $271,440 – up 8.2%.
Sydney reported the highest number of building approvals for units over 2020 with Melbourne tops for townhouses and also the leader for overall planned higher-density development.
Brisbane was the top-performing Local Government Area over 2020 for townhouse building approvals followed by Canberra, Moreton Bay, Blacktown, and Logan.
Melbourne City was the top-performing Local Government Area over 2020 for unit building approvals followed by Brisbane, Canberra, Yarra and Blacktown.
Although house building is booming driven particularly by the federal government's HomeBuilder incentive policy, the development of higher-density homes remains significantly subdued.
The demand for townhouses, however, continues to rise reflecting growing preferences for larger higher-density homes compared to units – a trend likely to be enhanced as a result of increased 'work from home' activity and the need for more space as an outcome of 2020 coronavirus restrictions.
The challenge for governments at all levels is to provide suitable land for medium-density development, particularly in popular inner and middle-ring suburbs.
