The Rise and Rise of Medium Density Housing

Data from the latest Census (2016) shows that there has been a large uplift in the number of dwellings across the capital cities between 2011 and 2016.  Between the two Census periods, Canberra has seen the greatest percentage increase in total housing stock followed by Melbourne, Darwin and Perth.  These four cities have each seen their housing stock increase by more than 11% over the five years.  While the nation has been in the midst of a dwellings construction boom over recent years, the total volume of housing stock increased by a lower proportion in Brisbane, Adelaide, Perth and Hobart between 2011 and 2016 than they did between 2006 and 2011.

Total increase in capital city housing between 2011 and 2016 Census

The second chart splits out the data from the first chart into the three main types of housing as reported in the Census: separate house, semi detached, terrace, townhouse etc and flat, unit or apartment.  The data highlights that over the five years between Census there has been a shift towards denser housing stock being added to the capital cities.  Interestingly, while driving around inner city areas you would be led to believe that it is higher density units which have been most abundant in new supply, the data points to medium density supply having ramped up the most.  In Sydney (17.9%), Melbourne (61.0%), Brisbane (29.6%), Adelaide (46.5%), Perth (49.4%) and Canberra (36.9%) it was medium density housing types which recorded the greatest increase in stock over the five years.  In each of these cities, except for Adelaide and Perth, separate house stock saw the smallest increase of the three housing types over the five years.

Increase in capital city housing by product type between 2011 and 2016 Census

The third chart highlights data from the 2016 Census showing the proportion of total housing stock by type.  Note that the Census also has two other types of housing defined as ‘other’ and ‘dwelling structure not stated’.  Across each capital city, separate houses remain the dominant property type however, given the previously presented data, the proportion of separate houses has fallen over recent Census periods.  Despite this, in most capital cities, medium and high density housing remain a relatively small but increasing proportion of the overall housing mix.

Proportion of total housing stock by type across the capital cities

10 years ago in Sydney, 61.7% of housing stock was separate houses, in the latest Census 55.7% of housing stock was separate houses.  If this trajectory continues by the 2026 Census less than half of Sydney’s housing stock will be separate houses.

This data highlights the changing nature of housing in capital cities.  With ongoing under investment in much needed infrastructure there are generally significant lifestyle benefits associated with living closer to the city centre however, the supply of land in the areas closer to the city centre is limited.  This is leading to increasing levels of medium and higher density dwelling construction and premiums for detached housing located close to the city centres.  Although approvals for these types of properties has slowed recently, it is anticipated that construction of medium and high density dwellings will remain elevated relative to historic levels.  The shift towards a greater proportion of capital city housing being medium and high density is expected to continue over the coming years.