Have Aussies embraced apartment living?

Advertisement
ScreenHunter_40 Oct. 17 11.44

By Leith van Onselen

The latest dwelling approvals data, released yesterday by the Australian Bureau of Statistics (ABS), confirmed that apartment living is growing ever more popular across Australia, but particularly in Australia’s larger and more expensive capitals.

While house approvals are at recessionary levels, unit & apartment approvals are running near their all-time high (see next chart).

ScreenHunter_08 Apr. 04 12.01
Advertisement

Moreover, the share of total approvals comprised of units & apartments hit 42% in the six months to February 2013 – all-time high – driven by record shares in both New South Wales (55%) and Victoria (46%):

ScreenHunter_17 Apr. 04 17.44

According to Commsec, 20% of all dwelling approvals are for apartments in a block of four storeys or more (i.e. high-rise), which also represents a new record high (see next chart).

Advertisement
ScreenHunter_15 Apr. 04 17.09

A prima facie examination of the above data would suggest that Australians are voting with their feet (or more likely wallets) and choosing apartment living for its greater convenience, given that apartments tend to be located in inner-urban areas. While this is no doubt a factor, perhaps exacerbated by the retirement (and downsizing) of the large baby boomer generation, the drive for urban consolidation by Australia’s state governments – in an effort to save on infrastructure costs and prevent so-called environmentally destructive ‘urban sprawl’ – is also likely a key factor. As argued many times previously, such urban consolidation policies have worked to inflate overall land values, both on the fringe of Australia’s capital cities and across the pre-existing urban landscape (see next charts), forcing many people to opt for apartment living purely out of necessity (due to its relative affordability), rather than through choice.

ScreenHunter_18 Apr. 04 18.01
Advertisement
ScreenHunter_19 Apr. 04 18.02

Like it or not, the shift towards apartment living is likely to continue as the population ages and Australia’s governments continue with policies of urban consolidation and under-funding of infrastructure.

[email protected]

Advertisement

www.twitter.com/Leithvo

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.