Knocking down a building often represents the first step in implementing a massive investment in any one property, both in time, and in money. Every quarter, the ABS provides data on the number of new dwellings approved for construction, and for demolition. 

Demolitions only represent a small fraction of dwellings in Australia, but high levels will often be followed by increased supply or increased quality of housing. Australia has seen fairly consistent growth in demolitions over the course of the pandemic. Although this began to taper off with increased construction costs and interest rates, as well as the removal of government incentives like HomeBuilder making financing large projects more difficult. 

In the next twelve months, it's likely that knockdown numbers will continue to drop, as interest rates remain high to combat historically high inflation. It's worth noting that in spite of all these headwinds, units saw a sharp increase in demolitions in the most recent quarter.

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As construction costs and interest rates grew and incentives were removed, eventually knockdowns peaked and eventually began to fall. Looking closely, we can see different geographies have continued to have strong levels of knockdowns, and we can reasonably expect the benefits of continued investment to flow into these communities. 

For houses, Sydney and especially Melbourne dominate, and while mostly relatively affordable suburbs feature for Sydney, Balwyn North and other Melbourne suburbs on the list appear to be more up-market. 

In units, new stock appears to be on the horizon for Surfers Paradise and the rest of the Gold Coast. Unsurprisingly perhaps, property knockdowns have been concentrated in the cities rather than the lower-density regions of the states. Not everyone will necessarily be happy with high levels of development in their neighbourhood. While the noisy construction and changing building scapes may mean better quality or higher density living opportunities, many residents may not be happy with the changes in their suburb.

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With the rise in interest rates and decline in new listings we’ve seen, knockdowns and new construction are key to addressing affordability concerns in housing, as new loans and housing for sale become increasingly difficult to obtain. With increased construction of new dwellings and the growth of new communities, it is crucial too that the investment from government ensures more robust local infrastructure keeps pace.

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