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Recent data from the Australian Bureau of Statistics (ABS) shows there was an increase in dwelling approvals through 2013, with 177,418 residential dwelling approvals. This is a 15.7 per cent increase, the biggest annual gain since January 2011. As RP Data analyst Cameron Kusher notes, housing construction is one of Australia’s key economic pillars, providing significant multiplier effects on the economy such as more jobs and increased demand for building materials, home furnishings, appliances and white goods.

Of the 177,418 approvals, 99,509 were house approvals and 77,909 were unit approvals – the greatest proportion of unit approvals on record at 43.9 per cent. It is interesting to note that ten years ago the figure was 32.6 per cent, while 20 years ago it was 30.0 per cent. Unit approvals increased by 23.4 per cent last year, more than double housing’s increase of 10.4 per cent.

While units made up 43.9 per cent of approvals nationally, the figure is (somewhat expectedly) higher in our cities. Looking at each city individually shows a broad range:

Sydney – 69.2 per cent

Canberra – 67.2 per cent

Darwin – 63.2 per cent

Brisbane – 57.5 per cent

Melbourne – 53.7 per cent

Adelaide  – 33.6 per cent

Hobart – 25.6 per cent

Perth – 22.1 per cent

Sydney has always had a high proportion of unit approvals, with the figure exceeding 50 per cent in 1992, a milestone reached by Brisbane in 2003 and Melbourne in 2012. The shift towards a higher proportion of unit approvals shows the ongoing densification of our capital cities, a shift Sydney has long led.

Overall, with dwelling approvals increasing in concert with strong population growth, we are likely to see ongoing densification in our cities. This reflects changing lifestyle patterns and growing demand for inner city living, with people now preferring to live closer to city centres and their amenities at more affordable purchase prices than for houses.

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