HomeBuilder, Land Shortages Fuel Demolition Upsurge

Melbourne is fast becoming the nation’s demolition capital, boasting the highest number of residential dwellings bulldozed in the past five years.

Of 114,000 dwellings approved for demolition across the country between mid-2016 and mid-2021, 32,000 were in Melbourne, according to new data from the Australian Bureau of Statistics.

Comparatively, the entire state of NSW recorded 33,000 demolitions in the same period with the area of Macquarie Park-Marsfield the most active.

Palm Beach and Surfers Paradise were the most bulldozed suburbs in Queensland with 223 and 203 dwellings respectively removed between 2016 and 2021.

In Western Australia, the Bentley-Wilson-St James region recorded the highest number of demolitions during the period, led by the demolition of the Brownlie Towers apartment complex to make way for the start of the Bentley 360 project.

In Victoria, wrecking crews were busiest in Heidelberg West in the city’s south-east with more than 1500 “stock removals” and more than 2000 new units, townhouses and apartments built.

The June 2021 quarter was the busiest period during the five-year period with 2300 dwellings demolished in Melbourne.

Areas with largest number of dwelling demolitions approved

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The numbers reflect a move from low to medium density in Melbourne’s inner-ring, with stand-alone houses making way for townhouses and unit blocks, which has been a long-term goal of policymakers aiming to slow Melbourne’s outer suburban sprawl.

The rise in demolitions came towards the end of the federal government’s HomeBuilder grant, which incentivised new home builds and renovating including demolishing and rebuilding.

In its last industry forecasts, the HIA has forecast a slump in new housing construction from 2022, but the industry was likely to stay stronger for longer as a result of the HomeBuilder extension.

HIA chief economist Tim Reardon said demand for new detached and multi-unit housing had also remained strong despite a shift in preferences.

“There has been a clear shift towards lower density housing during the pandemic and this trend does not appear to show signs of slowing,” Reardon said.

“This shift is not just those in units moving to detached housing but includes a shift to fewer people per household.

“As a result, we have seen a significant change in the volume, type and location of new homes [and] these trends are similar in other countries.

Leading indicators of demand show that the demand for new detached homes remains strong.

Detached home sales, since the end of HomeBuilder in April, remain at their strongest point since 2017 when over 115,000 commenced construction.

“Investors are looking through the haze of the pandemic to a brighter outlook on the other side,” Reardon said.

“Affordability constraints are also pushing households, particularly first home buyers, back to townhouses and apartments.