More townhomes, duplexes needed?

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The latest data from the Australian Bureau of Statistics (ABS) reveal that there is a lack of approvals for medium-density housing options like townhomes and duplexes across the country. How can this emerging trend affect Australians who are planning to buy a home?

Approval figures tell a lot of things going on in the housing market right now. Looking at the breakdown of approved dwellings, the local government areas (LGAs) in south-east regional and metropolitan centres appear to be witnessing a more significant number of housing developments.

In fact, a quarter of the 171,760 new dwelling approvals in the year to November were situated in just 10 LGA regions.

"These include the ACT region, Brisbane, Sunshine Coast and Gold Coast Councils, parts of Western Sydney, and areas on the fringe of the Melbourne metropolitan," said Eliza Owen, head of Australian Research at CoreLogic.

The combined number of housing units approved for these 10 regions alone is roughly 43,000. Of these approvals, 60.7% were for detached housing while 25.2% were for high-density units. Medium-density developments, however, accounted for only 14.1% of all approvals.

This could indicate that there is a "persistently missing middle", with fewer townhomes, duplexes, and other low-rise units getting approved, Owen said.

Also read: Urban Containment’s Impact On Housing Affordability

As the population continues to grow, especially in metropolitan regions, there is a need for diverse housing options, something that the 10 LGAs apparently lack according to recent data.

"Medium-density housing options can be important for young families who seek a more affordable housing option close to city centres, but require more space than in a unit, or older Australians wishing to downsize in their current area of residence to reduce housing costs in retirement," Owen said.

This concern was not confined within the 10 LGAs. The limited growth of medium-density approvals was also evident in the 478 regions that recorded new dwelling approvals for the year. Of the total approvals in these LGAs, only an average of 14.9% were for townhomes, duplexes, and unit blocks with less than three storeys.

"The development of more medium-density housing in Australia is particularly efficient for infilling major metropolitan areas, because it takes advantage of established transport and social infrastructure," Owen said.

With the expected growth in dwelling prices this year, Owen said ensuring a wide selection of affordable homes for buyers is crucial.

"As populations continue to converge in metropolitan regions, demand for such diverse housing options are likely to grow. If development continues to focus on the two extremes of density, metropolitan areas may see an erosion of diverse age and family demographics," she said.

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