Townhouses, Apartment Approvals Hit High Note

Australia’s appetite for townhouses and apartments hit a 7.5-year high just before Omicron pushed the construction industry back again.

The latest Australian Bureau of Statistics results showed approvals for apartments jumped 27.5 per cent in December while houses levelled off, retreating -1.8 per cent for December.

New South Wales led the property market for apartment approvals, up 32.1 per cent, while Victoria was up 2.5 per cent, bringing the national average to 8.2 per cent.

This was despite the other states performing poorly, including Queensland apartment approvals at -14.8 per cent, WA at -7.7 per cent, Tasmania -7.4 per cent and SA at -0.3 per cent.

Commsec senior economist Ryan Felsman said townhouses of one storey or more, made up a 20.2 per cent share of total annual building approvals.

“While Aussies have exhibited a strong preference for larger detached houses with backyards during the pandemic, demand for townhouses remains buoyant, reflecting an ageing population,” Felsman said.

“Demand for apartments and townhouses could lift later in 2022 as the international borders reopen with students and workers returning to inner cities.”

Dwelling approvals before Omicron

State Private sector houses Monthly chante Total dwelling unit approvals Monthly change
NSW 2,368 -7.9% 4917 32.1%
Vic 3,271 -1.5% 5733 2.5%
Qld 2,121 -0.7% 3019 -14.8%
SA 865 -7.1% 1158 -0.3%
WA 1,313 0.8% 1459 -7.7%
Tas na na 277 -7.4%
NT na na na na
ACT na na na na
Australia 10,444 -1.8% 17,698 8.2%

^Source: Australian Bureau of Statistics, Dec 2021

While the lead up to Christmas and New Year was positive for the apartment market, Omicron and associated shortages hit the construction industry hard.

There were disruptions to material supplies, labour and confidence as Covid cases mounted, turning the Australian Performance of Construction Index downwards in January.

Ai Group chief policy advisor Peter Burn said the past six months had been a volatile run.

“As they have done for some time, builders and constructors reported labour shortages although in this period the unavailability of existing staff who were Covid positive or required to isolate exacerbated the problem,” Burn said.

Felsman said although it might take longer than normal to complete building work due to labour and supply issues he expected things to improve.

“Construction work should pick up after the Omicron virus wave subsides, as restrictions are eased and the strong pipeline of residential projects is drawn down,” Felsman said.


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