The number of medium density home approvals across Australia is heading towards an all-time high, according to new research from Bankwest.
The Bankwest Housing Density Report, the latest instalment from the Bankwest Financial Indicator Series, revealed medium density new home approvals are approaching a 20-year high, with 85,323 approvals in the 12 months to November 2014.
While the report revealed a small decrease in the proportion of medium density housing approvals over the short term (43 per cent in 2014 compared with 44 per cent in 2013), the long-term trend shows medium density housing increasing across the nation and remaining well above the average rate of 33.7 per cent over the past 20 years.
Medium density accounts for the majority of new dwelling approvals in almost one third of Australia, exceeding house approvals in 30.4 per cent of all local areas nationwide.
In the year to November 2014, five capital cities saw medium density the topic of more than half of all housing approvals – Sydney had the highest proportion (64.5 per cent), followed by Darwin (58 per cent), Canberra (57.7 per cent), Brisbane (54.4 per cent) and Melbourne (54 per cent).
Hobart had the lowest proportion of medium density approvals (10.5 per cent), followed by Perth (26.8 per cent) and Adelaide (31.9 per cent).
What is driving the trend?
Bankwest Executive General Manager of Retail, Andrew Whitechurch, said the trend towards medium density housing was largely being driven by strong approval rates in Australia’s capital cities.
“Our research showed almost nine out of 10 medium density housing approvals were in capital cities last year,” Mr Whitechurch said.
“This is a marked increase from 2011, when the Census revealed capital cities accounted for only 76 per cent of all medium density dwellings.”
The report found 88.2 per cent of medium density approvals were for dwellings in Australia’s capital cities last year, with 11.8 per cent in regional centres.
This trend was most pronounced in South Australia, Victoria and Western Australia where more than 94 per cent of medium density approvals were concentrated in the respective capitals.
For Sydney, the figure was 88.2 per cent.
“The number of medium density housing approvals has increased in five out of the eight capital cities in the 12 months to November last year,” Mr Whitechurch said.
“Perth experienced the largest increase, with approvals growing by 43.7 per cent.”
“Brisbane and Melbourne also saw double digit increases (23.1 per cent and 18.9 per cent respectively), followed by Adelaide (8.9 per cent). Approval figures in Sydney have remained stable with a 0.4 per cent increase.”
Housing density in Brisbane is increasing the most rapidly, with the proportion of medium density approvals 33.7 percentage points (pp) higher than the proportion of medium density dwelling stock in 2011.
Brisbane is followed by Canberra (27.7 pp), Sydney (24.9 pp), Melbourne (24.6 pp) and Darwin (24.4 pp).
Hobart is the only city where the proportion of medium density housing is falling, down 8.6 pp.
“It’s likely first home buyers are boosting the popularity of medium density housing as they are finding it more and more difficult to afford a stand-alone house, especially in our capital cities,” Mr Whitechurch said.
“Bankwest’s First Time Buyer Deposit Report, released in December last year, showed that units are considerably more affordable, taking the average first time buyer couple 3.3 years to save a 20 per cent deposit on a median-priced unit in an Australian capital city compared to 4.1 years to save for a stand-alone home.”
Population growth is also leading to increasing levels of population density, especially in Australian capital cities – led by Sydney and Melbourne.
“Increasing competition for housing and higher prices will no doubt lead to further growth in medium density housing approvals in the future,” Mr Whitechurch said.
“Despite this ever-emerging trend, the growth in approvals for stand-alone houses outpaced medium density home approvals in the year to November 2014 (14.9 per cent growth compared to 10.2 per cent growth).”
Other key findings:
- The highest proportion of medium density approvals in 2014 has been in inner city areas – with virtually all approvals in Melbourne City (99.8 per cent) for medium density housing, closely followed by Sydney Inner City (99.4 per cent), Adelaide City (99.3 per cent) and Brisbane Inner (98.3 per cent).
- Greater Brisbane has 70.3 per cent of Queensland’s medium density approvals – most likely reflected by the large number of apartments, townhouses and units in areas like the Gold and Sunshine Coasts.
- Queensland is home to the greatest number of regional local areas for medium density housing approvals over the past 12 months.
Southport has the largest proportion of medium density approvals (97.9 per cent), followed by Robina (95.8 per cent), Surfers Paradise (90.3 per cent) and Broadbeach Burleigh (78.2 per cent).
- Tuggeranong is increasing its housing density faster than any other local area.
Over the past three years 79 per cent of dwelling approvals in Tuggeranong were for medium density dwellings, while back in 2011 only 14.8 per cent of existing housing in the area was medium density (a difference of 64.2 percentage points).
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