Rebound in dwelling approvals going to Reserve Bank’s plan- Cameron Kusher

Australia’s economic reliance is transitioning smoothly away from the resources sector to housing construction.

According to building approvals data released by the Australian Bureau of Statistics (ABS) there has been a sharp rebound in dwelling approvals through 2013; exactly what the RBA was hoping for.

Data from the ABS shows that throughout 2013 there were 177,418 residential dwelling approvals. Based on this figure the annual number of dwelling approvals was 15.7% higher over the year which represented the greatest annual increase since January 2011. The 177,418 dwelling approvals was also the greatest number of approvals since January 2011.

The data also highlights that the vast majority of dwelling approvals continue to be granted to the private sector with the public sector playing little part in the construction of new homes. Over the year, 98% of all dwelling approvals were to the private sector.

The improvement in the housing sector is important for a number of reasons. Importantly, housing construction is one of the key economic pillars that policy makers are looking towards to assist with the economic transition away from mega-infrastructure projects related to the resource sector which is winding down.

Additionally, housing construction provides a significant multiplier effect on the Australian economy, providing more jobs and demand for building materials, home furnishings, appliances and white goods.

Focussing on house and unit approvals, both have increased over the year however, there has been a much more significant upswing in approvals for units. Over the year there were 99,508 house approvals and 77,909 unit approvals nationally.

House approvals have increased by 10.4% over the year which was the greatest annual increase since October 2010. Unit approvals have increased by 23.4% over the past year. As you can see from the first chart, both segments are heading in the right direction but an ongoing rise would be advantageous.

RP Data Property Pulse - research article

Looking specifically at the 77,909 unit approvals, this was the greatest number of annual unit approvals on record. As a result, units also accounted for a record high 43.9% of all dwelling approvals throughout 2013.

To put the heightened level of unit approvals into perspective: 10 years ago 32.6% of all approvals were for units and 20 years ago they accounted for 30.0% of approvals.

It is clear that there is a significant push towards higher density development and this is particularly the case within capital cities. While 43.9% of dwelling approvals nationally were for units in 2013, across the combined capital cities the figure was recorded at 52.3%.

RP Data Property Pulse - research article

Looking across the individual capital cities, Sydney (69.2%), Melbourne (53.7%), Brisbane (57.5%), Darwin (63.2%) and Canberra (67.2%) all recorded more than half of all approvals for units over the year. Elsewhere 33.6% of Adelaide approvals were for units, 22.1% in Perth and 25.6% in Hobart.

The chart also shows that more than 50% of approvals have been for units in Sydney since 1992, in Melbourne since mid-2012 and in Brisbane since early 2003. Sydney has for a long time had a focus on higher levels of densification whereas it is a relatively new phenomenon across other capital cities.

RP Data Property Pulse - research article


The shift towards a higher proportion of unit approvals is indicative of ongoing densification of our capital cities as well as developers seeking to utilise land parcels to their highest and best use which is often multi-level development.

Looking at the number of dwelling approvals on a state-by-state basis, you can see that the recovery in approvals is broad-based. Approvals are -4.1% lower than a year ago in Victoria (after a strong run up in approvals during 2009/10) and -8.7% lower in Hobart.

In all other states, approvals are higher than a year ago; the largest increases were located in: New South Wales (27.7%), Queensland (22.0%), South Australia (22.6%), Western Australia (32.3%), Northern Territory (47.5%) and Australian Capital Territory (41.1%).

Keep in mind, Tasmania is the only state where home values continue to trend lower and Victorian dwelling approvals have been elevated over recent years while other states have recorded low levels of approval.

RP Data Property Pulse - research article

Overall the data is encouraging, highlighting that dwelling approvals are increasing, and based on the trend, it looks as if the housing pipeline is set to continue growing. We are seeing ongoing densification across select capital cities and this is reflective of changing lifestyle patterns and growing demand for inner city living.

We would expect that the proportion of unit approvals will continue to grow as the population increases and many property purchasers show a preference for living closer to the centre of cities at more affordable prices than those available for detached houses.



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Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit

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