If history can be used for reference, the apartment boom could last at least 18 months, and the last time there was an apparent oversupply, apartment prices fell 20%.
Of course, there is little evidence that things are getting colder, and the latest figures from the Australian Bureau of Statistics show that only three months of approval in history are higher than they are now.
The surge in approvals is largely due to higher-rise approvals for high-rise apartments. Approval of historic high-rise apartments.
Despite the decline in apartment approvals in August, it was still much higher than expected, and the 40 percent surge in July remained unabated.
Apartment approvals fell 10%, but still 25% higher than June's figure.
Paul Brennan, chief economist at Citibank, said new state apartment building approvals remained at record highs on average over the past three months, while Victoria and Queensland were not much lower than their all-time highs.
That was even before the Reserve Bank cut interest rates in August.
"the application was submitted before the rate cut in August, so a cut in interest rates will further increase the housing market's heat," he said. Oversupply of apartments could affect a wider market
So how high can the apartment boom go?
Shane Lee, an independent consultant who analyzed local goverment websites across the country, added up the number of applications awaiting local goverment approval and found more stories to follow.
"Brisbane developers are responding to supply issues and if they don't get a corresponding return, they will make painful decisions to reduce the project."
While supply is still lower than demand in Sydney and Melbourne, Mr. Lee said there is oversupply in some areas and will affect the market as a whole.
Sydney apartment prices fell by as much as 20% in 2004
Some of the earliest booms could cause concern for investors.
"We saw oversupply and a sharp drop in prices in 2004," Mr Lee said.
The resource boom had just begun to boost Australia's imports and exports, the United States had just emerged from recession and the Reserve Bank of Australia had begun to raise interest rates.
As real estate investment flowed into resource-rich Western Australia and Queensland, Sydney's apartments began to be vacant.
In addition, the rising interest rate environment also let buyers stop.
The experience has in some ways hit Sydney's apartment construction industry and caused a 10-year shortfall in supply that has only now eased. Botany and apartments near the airport are entering an oversupply. Evidence of falling house prices and rents is emerging
Citibank's Paul Brennan said the oversupply was consistent with downward pressure on prices and rents in Melbourne and Brisbane urban areas.
"the oversupply of apartments has already occurred in several key areas in Melbourne and Brisbane, where a large part of the market has sold for less than the purchase price."
Citi: the condominium boom will last for a while
The current apartment supercycle dates back to the bottom of the previous cycle in early 2012.
It's now the fourth year, one of the biggest architectural booms in history.
Unlike 2004, the boom is unlikely to be terminated by a fast-rising interest rate.
Market indigestion is more likely to be the beginning of the end of this boom.
"Apartments are usually 1-2 years late than approval, so the construction oversupply will continue until 2017 / 2018, when the number of apartments will double in the eastern states."
But the longer the boom lasts, the more drastic the subsequent revisions will be.
