Australia’s hidden high-rise housing crash

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The Albanese government’s fantastical target to build 1.2 million homes over five years is centred on delivering a boom in high-rise towers.

However, the April dwelling approvals data from the Australian Bureau of Statistics (ABS) showed that high-density approvals have collapsed.

Overall dwelling approvals fell by 5.7% in April in seasonally adjusted terms, which followed an 8.8% decline in March.

Apartments drove the decline in dwelling approvals, as illustrated below by CBA:

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Building approvals

In particular, high-rise apartments of nine-plus storeys:

High-rise approvals

The following chart plots high-rise approvals (i.e., 4 storeys or more) on a rolling annual basis across the major jurisdictions and nationally.

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High-rise apartment approvals

Annual high-rise approvals are tracking 53% below their 2015 peak nationally. Across the three major jurisdictions, high-rise approvals are tracking 67% below peak in New South Wales, 48% below peak in Victoria, and 59% below peak in Queensland.

Cost is arguably the major barrier to accelerating high-rise apartment construction. As illustrated below by Michael Matusik, constructing apartments is simply too expensive. As a result, buyers cannot purchase them at a reasonable price.

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New dwelling costs

Indeed, Urbis recently highlighted that selling prices in Australia’s major cities increased by a record 24% in Q4 2024, reaching more than $19,000 per square metre.

apartment costs per square metre
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The construction quality of new apartments in Australia is also poor, and strata fees are exorbitant, further restricting affordability.

Meanwhile, apartments also take too long to construct in Australia.

Average building completion time

The amount of time taken to build an apartment in Australia increased from approximately 1.75 years in 2013 to 2.75 years in 2024. This compares poorly against around one year to build a house and 1.4 years to construct a townhouse.

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The economics of apartment construction currently does not add up. This means that the hoped-for boom in apartment construction is pure fantasy.

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.