The increase in approvals includes developments for buildings rising more than nine storeys, signaling a trend towards higher-density living. This shift is captured in the latest statistics, highlighting a burgeoning interest in constructing towering apartment blocks.

However, as local governments continue with plans to rezone areas for these towering complexes, there is growing debate over their impact on housing affordability. The question remains: can a surge in apartment construction effectively drive down housing costs?

Rezoning impacts housing affordability

Since its rezoning in 1999, 179 apartment buildings have been constructed in the Green Square urban renewal area, ranging in size from three to 29 storeys.

To address this, the council developed a policy to ensure around 330 units would remain under the ownership of a community housing provider for low to moderate-income households. Developers are now required to set aside 3 per cent of residential development as affordable housing or to provide a monetary contribution towards this.

“Social housing is the sole responsibility of the state and federal governments and is not an area the City of Sydney has remit over,” the spokesperson says.

Apartments are not always affordable

Her apartment is across the road from Green Square town centre and this has allowed her to stay close to the city. But she says the unit is not particularly affordable.

“If we take affordable housing as housing which is affordable to people on low or very low incomes, it won’t make a lick of difference because all it does is stop it getting more unaffordable,” Davies says.

“They’re just less expensive than areas like Potts Point [in Sydney].”

Unit prices in Zetland during the same time period have also grown by 92 per cent, rising from a median price of $499,000 in September 2006 to $960,000 in September 2021, according to Domain.

But the median unit price in Zetland is still higher than Sydney’s overall ($805,947).

Supply doesn’t equal affordability, but it can help

Banks will also reduce lending in urban areas with price declines because they don’t want to be left with bad mortgages.

He points out that in gentrifying areas, run-down terrace houses that may previously have been a sharehouse for three or four people have been renovated and turned into family homes.

If the market had provided more apartments and townhouses, this would have prevented some people from being squeezed out at the bottom end of the market, Rawnsley notes.

Apartments don’t necessarily help families

This has implications for families who want dwellings with at least three bedrooms, as developers often don’t build large multi-bedroom apartments suitable for families.

Davies says knocking down houses to build two-bedroom units means you’ll probably see fewer families living in a certain area, and more renters.

He says building more mid-rise, almost Parisian-style apartments of around five storeys may be more desirable than high rises.

It says allowing three-storey townhouses and apartments on all residential land in capital cities could lift housing construction across Australia by up to 67,000 homes a year. Over a decade this could cut rents by 12 per cent and reduce the cost of a median-priced home by $100,000.

Supply needed at every level, experts say

“We’ve got more than 25,000 social and affordable homes in planning or construction with over 5,000 social and affordable homes completed,” she tells SBS.

“It’s faster, cheaper, and it worked the last time Australia faced a housing crisis in the post-war years. We know we can do it. We’ve done it before.”

“It just falls apart because some councils are willing to say ‘don’t worry about it’ and then nothing happens,” he says.

Income caps for certain schemes can also squeeze out families earning slightly more than the threshold.

“The scale of the problem is so big you need to be doing all these different actions.”