Latest Housing Stats

One of the most significant trends in the Australian property market is the movement towards higher density living. This is highlighted by the latest government figures that reveal over 40 per cent all residential building approvals in Australia are now for higher density dwellings such as apartments, townhouses, villas and duplex housing.

Rent figures produced by the ABS show that during April 2020 some 6,316 higher density dwellings were given building approvals compared to 8,864 building approvals for stand-alone houses. Of the total 15,400 residential building approvals during April 2020, some 41 per cent where for higher density homes.

In some areas of Australia, the level of higher density homes being approved for construction was much higher than this overall national average.

For example, in New South Wales,54 per cent or over half of all dwellings given building approvals during April 2020 where higher density homes.

These are very significant figures as they highlight the quiet revolution that has occurred in the property market in Australia during recent years with a major shift towards higher-density housing in Australia. For example, just two decades ago, the medium/high-density component of multi-unit commencements (units of three storeys or more) accounted for just 5 per cent of total housing commencements compared to around 25 per cent today. There have been several key reasons why higher density living has become increasingly popular in Australia.

Firstly, the Government is encouraging great higher-density construction, especially in the near city area to reduce the cost of urban sprawl. Various planning strategies have been implemented, and with infill sites predominantly accommodating mid and higher density dwellings, the policy focus has enabled the supply of multi-unit dwellings to greatly expand.

Secondly, there is a greater concentration of employment opportunities in urban areas than in the past and this is encouraging more people to live in inner and near city areas. Also, people want to live close to amenities with a higher level of this social infrastructure that is generally found in the inner city.

Thirdly, families are generally getting smaller, so they are requiring low maintenance housing such as apartments rather than detached homes on large lots. Baby boomers who are entering their retirement years also want to stay in their local area but in low maintenance homes and this trend is also encouraging higher density living.

Finally, for some households, multi-unit dwellings represent a more affordable option to detached houses. Housing affordability pressures, principally related to the price of serviceable residential land, have forced the market to make more intensive use of available land. This financial pressure has resulted in more dwellings in each area than there has been in the past.

This movement towards higher density living is particularly significant for property investors because over the coming years they will be purchasing this type of product as it becomes even more popular with consumers. Investors who are planning to purchase a higher density home such as an apartment should consider the significant tax depreciation benefits associated with this type of property purchase. While there are many issues concerning the depreciation entitlements on properties, in most cases, strata style homes such as new apartments provide a higher rate of depreciation than houses - all being equal. Buying a new apartment, for example, can provide a taxpayer with considerable depreciation benefits because of the significant tax benefits they offer through depreciation. Some DEPPRO clients are achieving that tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property. In some cases, these tax benefits can total $300,000 based on a purchase price of $500,000

A key part of ensuring that the investor obtains their full tax benefits is to have a professional depreciation professional prepare a comprehensive depreciation schedule.