Demand for medium density housing at record high
According to new research from Bankwest, Australia's demand for medium density housing is now at its highest recorded level.
The Bankwest Housing Density Report shows that a record 43.4% of total new home approvals in the year to October 2013 were for units, townhouses or semi-detached houses.
The increase in medium density approvals in the last year outstripped approvals of stand alone houses. Medium density approvals were up by 22.9% from the previous year, while stand alone dwelling approvals increased by only 6.5%. Approvals for medium density dwellings increased by 45.9%. In that period, approvals for stand alone houses fell by 8.5%.
Bankwest executive general manager Mark Reid says the push for medium density houses may be due to demographic changes, in addition to demand from first home buyers.
"Smaller housing options continue to increase in popularity as the population grows and consolidates around Australia’s capital cities," said Reid.
"The increasing popularity of medium density housing is possibly being driven by Australia’s first time home buyers, who are finding it difficult to afford a stand-alone house." According to Reid, the bank's First Time Buyer Report, released last year, showed that first home buyers are able to save for a 20% deposit on a median-priced unit in 3.4 years, while 4.2 years to save for a 20% deposit on a stand alone home.
As expected, capital cities accounted for the majority of medium density dwelling approvals, making up 87.1% in the year to October. Approvals for medium density homes in Sydney, Canberra, Darwin, Melbourne and Brisbane made up more than half of all approvals for that year.
Perth was the only capital city in which the proportion of medium density approvals declined, with the report showing that only 20% of total approvals were for medium density homes, down from 22.6% in the year to October 2012.
According to Reid, first home buyers are possibly taking advantage of the comparatively small difference in the time it takes to save for a unit and a house in the state.
“In Western Australia the gap between savings time for a house and for a unit is the smallest of any state in Australia," said Reird.
"It only takes six months longer to save for a house in Perth than it does to save for a unit. It’s possible that buyers are simply holding out for the additional six months in order to save for a stand-alone home instead of a medium density property."
The highest annual increase in medium density approvals was recorded in the ACT, where the proportion of medium density approvals out of total approvals was up 82.7%. Over the same period, Queensland saw the next highest increase, with 53.5%, which was followed by South Australia with 43.4%.
The report points to a long term trend of Australians turning to medium density homes, according to Bankwest. The proportion of medium density home approvals has annually averaged 30.6% since 1985; in the past 10 years the annual average has risen to 34.3%, and in the past two years this figure has increased to 40.1%.
jrichardson@propertyobserver.com.au