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NSW apartment construction continues to surge

The number of new units under construction in NSW is continuing to rise despite apartment building in Victoria and Queensland coming off the boil.

Building activity data released by the Australian Bureau of Statistics (ABS) last week revealed there were more newly built units completed over the December 2016 quarter than houses; the first time on record this has occurred.

The number of new dwellings approved for construction recently fell from historically high levels, according to the ABS. Its latest building activity data for the December 2016 quarter showed that dwelling commencements and completions were actually higher over the quarter. Meanwhile, the number of dwellings under construction and the number of dwellings approved, but awaiting commencement, actually fell.

Over the December 2016 quarter, 28,690 new houses commenced construction and 27,887 new units commenced construction. While new house commencements were 3.4 per cent lower, new unit commencements increased by 3.9 per cent.

CoreLogic research analyst Cameron Kusher noted that since the end of 2016, there was a substantial decline in house and unit approvals.


“It’s reasonable to expect that dwelling commencements will follow the lead of approvals and start to trend lower over the coming quarters,” he said.

In terms of dwelling completions, 28,102 new houses and 28,527 new units completed construction over the December 2016 quarter.

This marked the first quarter on record where more new units had been completed than new houses.

New house completions rose by 0.7 per cent over the quarter while new unit completions surged 26.1 per cent to a new record-high.

At the end of the quarter, there were 64,332 new houses under construction and 152,635 new units under construction.


According to Mr Kusher, there has been little change in the number of houses under construction over recent quarters while new unit construction remains historically high but has begun to fall.

“When you look at the individual state data, the number of new units under construction in NSW is continuing to climb to new historic highs while the number under construction in Victoria and Queensland, where concerns around inner city unit supply are more pronounced, is now clearly trending lower,” he said.

The ABS results also showed that the number of new houses and units approved for construction but not yet commenced, amounted to 9,814 houses and 29,044 units.

The number of new houses approved but not commenced increased by 5.0 per cent over the quarter while the number of new units fell by 11.7 per cent from its historic high the previous quarter.

“With dwelling approvals falling significantly from record-high levels since December 2016, it’s reasonable to expect that there will be fewer commencements going forward, particularly for units,” Mr Kusher said.

“On the other hand, unit completions could remain high for some time given that there are still many houses and units under construction.”

Data on projects due to commence shows that the number of starts fell in Victoria and Queensland while they continue to trend higher in NSW.

Mr Kusher believes the commencements pull-back in Victoria and Queensland is most likely related to unit oversupply concerns in the inner-city areas of the state capitals.

“In fact, the rate of growth for units is already dramatically lagging that of houses in Melbourne and Brisbane while the same trends are not evident in Sydney,” he said.

“Clearly we are seeing the market responding to the heightened level of dwelling construction over recent years.”

[Related: ANZ warns on apartment 'spill-over']

NSW apartment construction continues to surge

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