Dramatic fall in Canberra house approvals over five years as unit approvals increase
31 July 2017 Kirsten Lawson
The number of new houses being built in Canberra has dropped dramatically in five years, down more than 40 per cent.
Apartment building is also down since the 2011 year, but the fall is nowhere near as marked as for freestanding homes.
Canberrans are building three times more apartments than houses.
Housing approvals were down by 750 homes, to 1093, in the 2015-16 year, according to Australian Bureau of Statistics data. Apartment approvals were down 17 per cent in the same period, to 3329.
Seventy-five per cent of approvals for new dwellings in 2015-16 were for apartments, a new high.
In 2010-11, houses made up 32 per cent of approvals, jumping to 45 per cent in 2012-13, before slumping to just one quarter of dwelling approvals in the most recent figures. Data for 2016-17 are not yet released.
The Housing Industry Association says it's an alarming picture for home building in Canberra.
Regional director Greg Weller said the switch to apartments from houses was government induced.
"The building of apartments and multi-residential has increased, in part through changes in demand and affordability, but nonetheless it's a deliberate government strategic policy to push more people into higher density," he said.
"They've taken a strategic decision to develop the city centres, which I think is positive, but the way the land for greenfield development has been constrained is not in line with what the community is demanding."
When single residential blocks in new suburbs did come on to the market, demand was so high that the blocks were over-subscribed and prices were pushed up.
"From that period  there was a massive decline in the ACT in home building for single detached homes, and we're paying the ... price for that in land prices now," he said.
Building approvals differ slightly from building starts, but the picture for building starts is more dramatic still, showing 1021 freestanding houses and 4078 units were built in 2015-16 - or four apartments for every house, according to housing industry figures.
Mr Weller expected more detached homes would be built in the coming years, but did not expect any relief on land prices.
A spokesperson for Chief Minister Andrew Barr said the fall in approvals for single detached houses was due to the change in consumer preferences and the increase in the number of single person households.
Prices had been growing more strongly for units than houses, "clear evidence that there is a market for apartments as well as townhouses and single detached dwellings", he said.
"There is a growing preference, particularly amongst young people, to want to live close to employment and entertainment bases as opposed to suburban living ...
"More and more people are looking to live closer to town centres and services, and this is achieved by urban infill."
Numbers of building approvals were moving back towards the longer-term trend, following a record high last year.
In May 2017, the number of approvals per 1000 people in the ACT was at the national average, he said.
Master Builders Association ACT deputy director Michael Hopkins said the 2011 figures were a high point, and approvals had settled at 4000 to 4500 a year. But the shift to apartments was marked, he said.
And he rejected Mr Barr's suggestion that the switch was driven by demand.
"In the 2016-17 year approvals for single detached houses have fallen to around 20 per cent of total dwelling approvals compared with 50-60 per cent in previous years," he said.
"This change is due to land release policies of the ACT government, not consumer preference."
Mr Hopkins said the next four years should help "rebalance" the supply, with more private sector involvement in development - a reference to the airport group's development of Denman Prospect, the government's joint venture with the Corkhill brothers to develop West Belconnen and the commonwealth's development of CSIRO land in Belconnen.
Master Builders expects a "fairly dramatic" increase in building approvals, saying the private sector was better at getting land to market quickly and efficiently, and more attuned to the demand for standalone houses.
The Bureau of Statistics data show an average cost to build a house - at least according to figures used in building approval applications - of $424,000 in 2016, compared with $324,000 in 2011.
The cost of building a unit is $234,000, just $30,000 more than in 2011.
Date: July 15 2017