Current housing activity
The growth area Local Government Area’s (LGA) have recently experienced record high approvals for detached houses with 21,169 building approvals in 2020. A record 14,495 dwellings were approved in the growth area LGAs for six months to 30 June 2021. The National Housing Finance and Investment Corporation suggests housing investment was brought forward due to government financial incentives. The Commonwealth Government extended applications for the HomeBuilder Program to 14 April 2021.
Dwelling approvals in the established parts of Melbourne have declined since 2017 (the last peak), when 36,660 dwellings were approved. A total of 24,525 dwellings were approved in 2020 within the established parts of Melbourne which is slightly less than the 25,734 dwellings approved in 2019. In 2020, dwelling approvals in middle and outer Melbourne LGAs declined compared to 2019, while approvals in inner Melbourne increased by a thousand dwellings.
At December 2020, there were around 162,400 dwellings on major residential redevelopment sites that were either under construction or in the development pipeline. 79% of dwellings proposed for major redevelopment sites are expected to be built in buildings of four or more storeys.
Annual Supply of major residential redevelopment site dwellings by built form
In 2020 there has been a decrease of 18,100 dwellings in the redevelopment pipeline compared to 2019. Almost half of this decrease occurred in the City of Melbourne. Some of this is due to projects being completed. However, the number of dwellings in the redevelopment pipeline has been declining since 2016. This decline in the supply of dwellings corresponds in the decline in apartment approvals in the inner suburbs, particularly in the City of Melbourne, since 2017.
Some of this decline is due to projects proposed for major redevelopment sites being discontinued at various stages. Some redevelopment sites are withdrawn as residential projects and the site is repurposed for other uses such hotels, offices and other commercial purposes.
The inner and middle ring municipalities continue to be the dominant regions for the supply of anticipated dwellings on major redevelopment sites with nearly 85% of dwellings .
(80% of current and anticipated major development activity in inner Melbourne are in apartment projects of ten storeys or greater. In comparison, the middle ring redevelopment projects provide a greater range of dwelling types. Apartment projects ten storeys or greater make up a third of the middle ring dwelling pipeline, while low rise projects, such as detached houses, townhouse and low scale apartment projects make up nearly 20% of the dwellings in the pipeline.
Supply of major residential redevelopment dwellings by region and built form
Across the metropolitan region, 23% (37,773) of anticipated major redevelopment activity is in the Melbourne LGA and mainly consists of apartments greater than ten storeys. Port Phillip, where opportunities exist for larger apartment buildings, has the second highest number of anticipated dwellings followed by Maribyrnong where there are some large redevelopment sites. The remaining Inner and Middle Ring LGAs have a mix of development types, with four to nine storey development common in most of these municipalities.
Supply of major residential redevelopment dwellings by LGA and built form and status (excluding City of Melbourne)
In 2020 there were 13,306 dwellings assessed as completed on major redevelopment sites, this is less than the 14,726 completed in 2019. The City of Melbourne had the highest level of dwelling in the pipeline (37,773) and completed dwellings (5,680) in 2020.