Australia is Building an Epic Number of Apartments Right Now, Especially in New South Wales
Australia built a record number of residential dwellings in 2016, although you perhaps didn’t realise given the scale of price gains seen in southeastern capitals over the past year.
Some 211,164 to be precise, up from 196,154 in 2015. And 94,811 of those were “other” residential dwellings, with the vast majority of those apartments.
Most of them were in Australia’s most populous states — New South Wales, Victoria and Queensland — with many located in high-rise towers.
Yes, it’s not only been unprecedented residential building boom, but an unprecedented high-rise boom.
You only have to look out the window in Sydney, Melbourne and Brisbane to get a feel for just how truly epic it’s been.
And it’s got a long way to run yet, even if 2016 was likely the cyclical peak in the current housing cycle.
This chart underlines that point.
According to building activity data released by the ABS earlier today, there were 136,217 “other” residential dwellings under construction during the December quarter last year in New South Wales, Victoria and Queensland.
To put that figure into perspective, while fractionally below the 138,253 number built in the September quarter, it was still 121% higher than the same quarter five years earlier.
More than double the number in just five years.
Within the quarterly total, there were 62,040 other residential dwellings under construction in New South Wales, the highest number on record.
Of the other major markets, 44,634 were being built in Victoria, and some 29,543 in Queensland, moderating from the record highs seen in both states earlier in the year.
And while the high-rise construction boom now appears to have past its peak, there’s still a lot of supply left to come if the next chart is anything to go by, especially in New South Wales.
According to the ABS, 14,791 other dwellings had been approved in New South Wales but had yet to be commenced, falling from the record-high level of 17,503 seen in the September quarter.
At 5,555 and 3,758 respectively, the numbers were significantly lower in Victoria and Queensland, and they too fell from the levels seen in the prior quarter.
Still, that’s still a lot of building to come, with activity likely to remain strong for at least the remainder of the year.
“The RBA estimates that multi-units developments typically take between four and six quarters to complete,” said Kristina Clifton, economist at the Commonwealth Bank, following the release of the report.
“There is also a longer time between approvals and commencement for multi-units — around 1.5 quarters compared to around 0.7 quarters for houses.
“This prolongs the peak in the residential construction boom and we expect to see solid activity continue this year,” she says.