Senior economist with  Australian property monitors Dr Andrew Wilson.

Economist Andrew Wilson says there is a danger of short-term flooding of the market. Photo: Anita Jones

Building approvals grew at a faster rate in the ACT than anywhere else in Australia in the October quarter, with high-rise apartments the dominate factor.

There was a 66 per cent rise in total building approvals in the three months to October compared with the same quarter in 2012, with high-rise apartments - defined as four storeys or more -growing by 819 per cent in the small market.

The trend towards more apartments shown in the Housing Industry Association figures on Monday concerned one leading commentator, who said Canberra risked an oversupply of high-rise homes similar to what has occurred in inner Melbourne and Brisbane recently.

Australian Property Monitors' senior economist Andrew Wilson said there was a developing demand in the ACT for residences with a smaller footprint, but there was a danger of a short-term flooding of the market.

"I'm not sure there is the demand in the ACT or Canberra for high-rise development," Dr Wilson said.

"I don't really think Canberra has the culture of high-style apartments naturally - its urban demography just isn't mature enough."

The number of detached dwellings approved dropped by 36.5 per cent relative to the October 2012 quarter, but there was a rise of 231 per cent in semi-detached approvals.

Dr Wilson said the high-rise developments were driven by capital city governments as a way of stimulating activity, instead of a response to the more organic growth of demand for detached properties. "We really haven't seen the growth of numbers in detached dwellings, but we have seen the high-rise growth - and a lot of that is driven by government initiative, because a lot of them are situated in brownfield [previously built on] sites."

"This is something the Canberra market needs to be particularly mindful of, given it is the national underperformer in terms of housing market activity - Canberra will be the only capital that achieves negative [house prices'] growth this year.

"It's not uncommon for elevated levels of high-rise developments to end up in an oversupply market - there's been examples on the Gold Coast, Sunshine Coast, Melbourne, even inner-city Brisbane - only in Sydney has demand in the short-term been able to meet supply."

Nationally there was an 86 per cent increase in high-rise approvals, as NSW and Victoria achieved growth of 98 per cent and 68 per cent in the sector.

The overall Australian approvals growth was 19.7 per cent, with high-rise developments making up the bulk - 15.9 percentage points - of this boost.

"The question is how many of these developments will get out of the ground and how long before they are places people want to live," Dr Wilson said.

The HIA report said the approval figures signalled improving prospects for the recovery in new residential construction to continue into 2014.

Dr Wilson said he would have expected the rise in detached housing approvals - up 9.3 per cent - to be greater, given a stronger national property market and low interest rates.