Strata buyers are drifting away from apartments and towards townhouses in the post-Covid era, as people seek more space in which to work from home, and less close contact with relative strangers in apartment blocks, according to a new report from Australian property platform Archistar.
Building approvals for higher-density homes, including apartments and townhouses, fell again over 2020 – the fifth consecutive year of declining development, with no prospect of a sustained revival in activity, says Dr Andrew Wilson, the group’s chief economist.
Archistar’s latest report notes that government stimulus initiatives specifically directed at the house building sector have resulted in a surge in planned construction of standalone houses.
Not mentioned in his report is a perceived fall in confidence among potential apartment buyers following the Mascot and Opal towers crises, not to mention combustible cladding fears.
Whatever the reason, higher-density development levels remain subdued by comparison, accounting for just 34.7% of total home building approvals – the lowest market share since 2010.
That said, townhouse construction continues to outperform units, reporting a slight increase in annual activity but representing a 42.7% market share of overall higher-density development – the highest proportion for 11 years.
All capitals reported declines in building approvals for units over 2020, with Adelaide and Perth the clear underperformers, says the report. Brisbane and Melbourne however recorded high levels of planned townhouse development over 2020 with Sydney stable.
In fact, greater Sydney reported the highest number of building approvals for units over 2020. But greater Melbourne was tops for townhouses, with those figures pushing them to the top of overall planned higher-density development.
Brisbane was the top performing Local Government Area for townhouse building approvals in 2020, followed by Canberra, Moreton Bay, Blacktown and Logan.
Melbourne City was the top performing Local Government Area over 2020 for unit building approvals followed by Brisbane, Canberra, Yarra and Blacktown.
“Although house building is booming, driven particularly by the federal government’s HomeBuilder incentive policy, the development of higher-density homes remains significantly subdued,” says Dr Wilson.
“The demand for townhouses however continues to rise reflecting growing preferences for larger higher-density homes compared to units – a trend likely to be enhanced as result of increased work from home activity and the need for more space as an outcome of 2020 coronavirus restrictions.
“The challenge for governments at all levels is to provide suitable land for medium-density development, particularly in popular inner and middle-ring suburbs.”