Dwelling approvals down 9.1% – Tower Apartments Tumble 20.6%

The housing boom continues to cool, with total dwelling approvals falling to 214,7786 separate dwellings for the year-ended July 2017, down 9.1% on the prior year. While the total decline is significant, approvals remain above 200,000 and any residual strength in approvals can be recorded to Free-Standing houses, approvals of which declined a very modest 1.8% over the same period.

The chart below shows Australia’s total approvals on a monthly basis, and on an annual basis (the green dotted line), along with annual approvals of free-standing dwellings (the red dotted line).

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To go straight to the dashboard and take a closer look at the data, click here.

As the chart amply demonstrates, free-standing dwellings are retaining some stability, with 114,046 approvals for the year-ended July, down just 1.8% on the year-ended July 2016. However, as the next chart shows, the situation is much more dramatic, on a year-on-year basis, for the only housing format currently capable of rivaling free-standing dwellings – dwellings contained in Four + Storey Apartment blocks.

fig 29

 To go straight to the dashboard and take a closer look at the data, click here.

The red bars show clearly what the data tells us. For the year-ended July 2017. 4+ Storey Apartment approvals fell to 56,693, down a very significant 21.8% on the prior year. Pundits in the market are calling the large apartment tower market as ready to collapse, but that will not necessarily show through in this data.

That is because the data itself includes what are increasingly distinct housing formats. There is a big (not to say tall) difference between apartments in a 30 storey block in inner Sydney, Melbourne or Brisbane, compared with apartments in a five storey block that is a few kilometres from those capital city centres. The former have had their day for now, the latter are just coming into their own.

The ‘lower rise’ of the 4+ Storey apartments are booming in our major cities and their denser urban fringes. They will sustain the numbers of approvals for the otherwise hapless 4+ Storey apartments for a while to come yet.

Of the other housing formats, it is important to note that similar to the ‘lower rise’ portion of the 4+ Storey apartments, Semi-Detached dwellings are still experiencing growth, or at least are stable.

One-Storey Semi-Detached dwellings saw approvals rise 2.4% over the year-ended July, totaling 9,038 dwellings. Their 2+ Storey counterparts were down just 0.3% to a still very strong 24,442 separate approvals.

The conclusion we ought to draw is that approvals of total dwellings are down, but the Australian dream, in its modern incarnation, is alive and strong. Free-standing houses in the burbs are still a very stable market.