Sydney, Melbourne and Brisbane among biggest building regions in Australia: CommSec

Sydney, Melbourne and Brisbane among biggest building regions in Australia: CommSec
Sydney, Melbourne and Brisbane among biggest building regions in Australia: CommSec

There are around 560 Local Government Areas in Australia – broadly local councils. But about 30 of the LGAs account for around half of the dwelling approvals (approvals to build new homes) in Australia.

In 2017 there were around 221,000 dwelling approvals granted by local councils. And the major cities of Sydney, Melbourne and Brisbane were represented in the top eight building regions of 2017.  

While demand for apartments appears to be peaking, building of free-standing houses in regions of high population is lifting with approvals in the last six months of 2017 well up on a year ago.

What does it all mean?

In the past, you would have had to go into the suburbs to find the regions with the most home building activity, and perhaps well outside the city centres. But over recent years the focus has been on urban consolidation rather than urban sprawl. As a result the city regions of Sydney, Melbourne and Brisbane are now amongst the biggest building regions in Australia. And clearly, it has been apartments that have dominated the number of approvals recently given to build new homes.

The Australian Bureau of Statistics (ABS) provides regional building data at a local government area (LGA) and Statistical Area Level 2 (SA2). We have focused on the data provided at an LGA level. Reflecting the more consolidated approach to local government, the City of Brisbane covers the CBD and much of the metropolitan area with a population of over 1.1 million people. Dwelling approvals in Brisbane (C) totalled 10,646 in 2017, ahead of the Gold Coast (5,941). Melbourne City accounted for 5,601 dwelling approvals in 2017 despite only have a population of 136,000.

Notable in the list of biggest building regions was Camden in NSW. Despite a population well below that of other big building regions at just over 78,000, Camden was the 14th biggest region in Australia for dwelling approvals in 2017.

Dwelling approvals eased only 5.6 per cent nationally in 2017 and further declines are likely in 2018. The list of biggest building regions is useful in highlighting those regions that may be at most risk of a slowdown in construction. But population growth, rental vacancy rates, and changes in activity in industry sectors are other factors that need to be included in determining potential risks.

For instance, dwelling approvals in Wyndham in Victoria in the last six months of 2017 were 31 per cent higher than a year earlier and in Casey they were up 14 per cent. But in Melbourne City, approvals are down more than 8 per cent on a year ago. The apartment building trend in city centres appears to be peaking but house building is actually lifting rather than slowing.

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Sydney, Melbourne and Brisbane among biggest building regions in Australia: CommSec 

What do the figures show?

The City Of Brisbane had the highest number of dwelling approvals in 2017 at 10,646, followed by Gold Coast (5,941), Melbourne (5,601), Wyndham (Vic) (5,464) and Moreton Bay (Qld) (5,208).

The 30 regions with the highest number of dwelling approvals accounted for half of all the approvals granted in 2017.

There were 59 LGAs with no dwelling approvals in 2017. And there were a further 168 of the 557 LGAs with fewer than 10 dwelling approvals made in the year.

Queensland, Victoria and NSW were the most active home building states in 2017. The first Western Australia region in the list of building regions was Wanneroo (1,803) in 32nd spot. The first South Australian region was Charles Sturt (1,253) in 52nd spot. The first region in the Northern Territory was Palmerston (378) in 125th spot. The first region in Tasmania was Clarence (338) in 135th spot.

Nationally, dwelling approvals in the last six months of 2017 were only down 0.5 per cent on a year earlier. But while approvals in the ACT were down 35 per cent, and down 22 per cent in the Northern Territory, they were up 40 per cent in Tasmania, up 13 per cent in Victoria and up 12 per cent in South Australia.

In the Brisbane LGA, new dwelling approvals in the last six months of 2017 were down over 19 per cent on a year ago. In Sydney, approvals were down 9.5 per cent and in Melbourne, approvals are down by 8 per cent.

What are the implications for investors?

Home building trends have implications for regions, building trades, building material suppliers and home products retailers. There is an abundance of apartments being built at present, many close to capital cities. But apartment building is nearing peak levels. In contrast, house building regions are seeing a resurgence on interest.

While overall home building is expected to ease over the next few years, there will be sharp divergences across regions and across the types of homes being built.

Tags: 
Housing Approvals Dwelling Approvals

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