According to the latest Bankwest Housing Density Report, a record 43.4% of total new home approvals were for medium density dwellings* in the year to October 2013.
This was an increase of 22.9% on the previous year – which was considerably higher than the 6.5% increase in stand-alone home approvals over the same time period.
Further, the data showed the increase is a long-term trend. Medium density housing approvals grew by 45.9% over the last five years. Approvals for stand-alone homes fell by 8.5% over the same period.
Bankwest’s Mark Reid said that smaller housing options continue to increase in popularity as Australia’s population grows and consolidates around the capital cities.
It was likely that the trend was being driven by first home buyers (FHBs) who found it difficult to afford a stand-alone house, he said.
“Units are a considerably more affordable option. It takes first time buyers 3.4 years to save for a 20% deposit on a median-priced unit compared to 4.2 years to save for a standalone home.”
Propertybuyers.com.au CEO Rich Harvey said the main reasons for the growing popularity of medium density housing were affordability and maintenance.
“Not only is it significantly cheaper to buy medium density housing in proximity to attractive locations, like the CBD or the beach, but the maintenance requirements involved are much lower.”
These features were particularly attractive to two demographic groups – FHBs and downsizers.
Harvey also felt that high demand from Asian buyers, along with a lack of available land, was influencing the trend towards medium density housing in particular areas – like Sydney.
Going some way to back this suspicion up was the fact that over half of the total dwelling approvals were for medium density homes in five of Australia’s capital cities.
Sydney (68.3%) measured the highest proportion followed by Canberra (68.0%), Darwin (67.9%), Melbourne (54.6%) and Brisbane (53.4%).
Perth was the only capital city to buck the national trend. In Western Australia, stand-alone homes continue to be more popular than medium density housing.
Reid said this was probably because it only took six months longer to save for a house deposit, as opposed to a unit deposit, in Perth.
“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.”
*Medium density housing = units, apartments and semi-detached housing.
