Pictured: Royal Ascot Residences Ascot Vale
The 2023 Housing Statement’s 70/30 focus seeks to allocate 70% of housing supply to established, infill areas and 30% to the greenfield sector to accommodate the state’s growing population. This means that based on the estimated 80,000 new dwellings needed each year over the next decade, 70% will be allocated to the infill areas.
Of the required infill supply, it is not unrealistic to expect around 80% to be delivered through townhomes or apartments; both of which have been battling headwinds and experiencing notable drops in key leading indicators.
In CY23, Victoria’s total dwelling approvals hit their lowest level since 2013, with only 50,800 recorded approvals. Of these, 10,200 were for townhomes and only 7,900 for apartments, with recent figures indicating Q4 2023 saw lower approvals than the same time last year.
While Q4 2022 saw a slight increase in the commencements and completions of townhomes and apartments with 5,500 dwellings commencing construction by Q3 2023 (a notable surge compared to previous quarters and years), this positive trend may be short-lived. The declining approval numbers in 2023 suggest a shrinking pipeline of projects likely to result in low commencement figures in the first half of 2024.
In Q2 2023, 6,200 townhomes and apartments were completed marking the second-highest figure since Q4 2021. However, the low completion numbers in the preceding quarters means that only 22,400 medium and higher-density dwellings were constructed across the state over the 12 months to Q3 2023. This figure falls far short of the roughly 45,000 townhomes and apartments needed to meet the housing targets over the next decade.
This article references findings from our Q4 2023 Economic and Residential Property Market Report.