Approvals for residential apartments have fallen into a slump, according to the latest figures from the Australian Bureau of Statistics.
While approvals for private residential homes rose 10.7% or 12,520 homes, the number of apartments going ahead fell by 24.9%, according to the seasonally adjusted figures for February.
This means there were 3,771 fewer apartments approved in February when compared to the 2023 figure.
The ABS reports that the total number of dwellings approved fell 1.9% following a 2.5% drop in January.
ABS head of construction statistics, Daniel Rossi, said the disappointing results were “driven by a fall in the number of approved large apartment projects”.
Approvals for private sector houses rose in all states: Western Australia (20.7%), NSW (17%), Victoria (12.4%), Queensland (3.4%), and South Australia (2%). But total dwelling approvals fell 28.5% in Queensland.
The total value of approved residential buildings fell 16.8%, which included a 19.1% decrease in the value of new residential buildings. Values for alterations and additions were also down.
It is likely that there will be price consequences if the fall in apartment approvals continues. More residential accommodation is needed in Australia, and a dramatic decrease in the number of apartments coming onto the market in the months and years ahead will put further pressure on prices.
Of course, this is likely to be good news for those who own apartments or investors whose portfolios are dominated by this type of accommodation.
If you’re considering purchasing an apartment, these tips may help you with the decision-making process.
No surprises
The best way to avoid nasty surprises when purchasing an apartment is to thoroughly investigate the strata committee, its finances and whether any future work has been planned or mandated. If so, you’ll end up having to contribute to this work.
Building evaluation
A building inspection will be mandatory if you’re buying with a mortgage, but it’s unlikely to answer all your questions. It can be wise to commission a more thorough inspection of the entire building, not just of your apartment.
Let there be light
Pay attention to the layout and natural light that comes into the apartment. A well-designed layout with ample light makes a small space feel larger. Be aware a baking summer sun can make afternoons in an apartment unbearable, or you’ll live with the curtains drawn.
Location question
For an apartment value to increase in line with market trends, make sure you’re buying in an area with easy access to public transport, parks, shops, and schools. Amenities such as a gym, pool, parking, and security will increase the value.
The potential
Compare prices of similar apartments in the area before making an offer.