The Urbis figures were based on a national survey tracking apartment projects and sales across Sydney, inner Melbourne, Brisbane, Perth and the Gold Coast.

Official Australian Bureau of Statistics figures for the 2017 calendar year show approvals of new apartments, townhouses and semi-detached dwellings fell 10.2 per cent to 104,403 from 115,976.

Perfect storm of regulation

The slump looks set to continue this year with the biggest monthly dwelling approvals decline since July 2012 recorded in December – a 20 per cent fall – triggered by a 39 per cent slump in new attached dwelling approvals.

The development industry has warned that a reduction in supply of new apartments – an entry point for many first-home buyers – will put further pressure on affordability, particularly in Sydney and Melbourne where existing homes are now completely out of reach for most first-home buyers trying to get into the market.

The number of Melbourne projects almost halved to 33 (from 62 in 2016). Richard Cornish

According to the latest Urban Development Institute of Australia (UDIA) State of the Land Report, Sydney and Melbourne accounted for 68 per cent of new multi-unit supply over the last two years.

"A significant decline in multi-unit production would have a very significant impact on the ability to reach the NSW state government's annual housing targets," the UDIA report said.


In Melbourne, it warned that 2017 "will represent a peak year of multi-unit supply in Melbourne as the forward development pipeline indicates a moderation in production output over the coming two years".

"It's like a perfect storm of regulation and changes," said Ashley Williams, chief executive of Melbourne-based Evolve Development following the release of the ABS figures in February.

In Brisbane, which is facing an oversupply of apartments, the number of new projects launched plummeted to just 12 in 2017 compared with 57 in 2016. DarrenTierney

"What we've experienced over the last 12 months has been a whole series of government interventions that have basically scared away the investor buyer in the market, particularly in apartment developments and more medium-density-style developments."

Sydney most expensive

Other major developers including Meriton's Harry Triguboff and young Melbourne developers Tim Gurner and Jonathan Hallinan have highlighted the steep decline in overseas buyers of new apartments.

"It's not bad, it's very bad," Mr Triguboff told The Australian Financial Review in January.

"When we start saying that stamp duty for foreign buyers should be 12 per cent instead of 4 per cent, that is called stupid."


Looking ahead to 2018, Mr Dawson said it was expected that activity would spread out from inner Sydney into markets like Parramatta and North West middle ring markets like North Ryde and Macquarie Park.

"In Melbourne, continued growth and activity is expected in the middle ring, which is currently keeping pace with inner areas," Mr Dawson said.

In Brisbane, project launches are expected to remain low throughout 2018, which will allow for the absorption of unsold product, while in Perth and the Gold Coast sales activity rose 26 per cent and 37 per cent, respectively.

"The Perth established market is already starting to see a recovery after a long market downturn. This will start to flow through to the apartment market as confidence levels improve and completed stock levels reduce," Mr Dawson said.

"On the Gold Coast, the lead up to the Commonwealth Games is building excitement on the ground, and with increased levels of pre-development activity we are expecting to see project launches and sales increase."

Urbis recorded the weighted average apartment sale price at $757,678 in the December quarter and a two-bedroom, two-bathroom product as the most popular accounting for 50 per cent of sales, up from 47 per cent.

Sydney apartments were by far the most expensive with a median price of $1.1 million with inner Melbourne, Brisbane and Perth apartments all priced just under $700,000. The Gold Coast's median price was $620,000.