RPM Group’s latest South East Qld (SEQ) property research report is pointing to a chronic housing shortage within the next 23 years unless there’s a major increase in annual dwellings needed to accommodate an estimated two million new residents.

The report highlights major shortfalls in the state government’s recently released Draft SEQ Regional Plan to provide an additional 34,500 dwellings annually – 863,600 by 2046 – to meet estimated population growth.

Based on RPM’s numbers, there needs to be a 52% increase in the average 22,778 residential lots registered in SEQ’s registrations annually – of which units comprise 40% – if the region is to meet the housing demand target.

The closest SEQ has ever come to the targeted 34,500 new dwellings annually is 33,821 built in 2017 when Brisbane experienced an apartment boom.

With the cost pressures on high-rise apartments not going away any time soon, going up rather than out is not going to provide the needed supply and certainly not affordable supply of new dwellings.

Cost constraints

Despite the SEQ Regional Plan’s focus on ‘building up’, RPM’s Queensland managing director Clinton Trezise attributes a paucity of high-density infill projects within the urban footprint to a blowout in construction costs which makes them unaffordable.

“Historically, Queensland has not been able to achieve the level of construction needed to meet the future demand for housing,” said Mr Trezise.

“With the cost pressures on high-rise apartments not going away any time soon, going up rather than out is not going to provide the needed supply and certainly not an affordable supply of new dwellings.”

What this massive shortage of supply has done, adds Trezise, is place upward pressure on vacant land prices, with the median settled land price across the region up 12% to $340,000 in the last financial year.

Logan leads the charge

Comprising around a third of all settled sales in the last [financial] year, Logan is the market’s dominant land provider, with 1,323 recorded sales surpassing all other local government areas, followed by:

  • Ipswich 15%.
  • Brisbane 12%.
  • Sunshine Coast and Moreton Bay at 11% respectively.
  • The Gold Coast, with limited land supply, represented only 3% of annual total land sales.

Underpinning rapid growth in land prices, the report notes are major supply constraints, which Trezise claims are undermining affordability in regional areas of SEQ.

“The government and councils need to facilitate more land for greenfield developments if the affordability issue is to be addressed,” he said.

“Unfortunately, this is at odds with the latest SEQ Regional Plan which has increased the emphasis on high-density infill developments throughout the region.”

One size doesn’t fit all

Interestingly, the Draft 2023 SEQ Regional Plan has shifted its dwelling growth ratio from 60/40 in 2017 – 60% in infill areas and 40% in greenfield areas – to 70/30 in 2023.

Trezise sees merit in leveraging off existing urban infrastructure, especially in Brisbane with the level of public infrastructure being provided for the Olympic Games.

However, he doubts a one-size-fits-all approach will adequately address the short-term and medium-term supply issues facing the SEQ region.

“Land is not getting developed fast enough by the current SEQ Regional Plan with complex approval processes, land constraints, and lack of needed infrastructure meaning seemingly developable land cannot be unlocked to facilitate supply or simply supply cannot be developed fast enough,” said Mr Trezise.

“The reality is that adequate affordable supply is not going to come from apartments because of the cost constraints to build and affordability to buy are impacting the sector.

Release more land

While the ‘build up rather than out’ approach aims to maximise existing infrastructure for new housing, Trezise reminds planners that historically, the heavy lifting for new housing supply in SEQ has been done by greenfield land developments.

The only way SEQ can increase the output of dwellings by 52% to meet demand, adds Trezise is to release more land.

“He expects greenfield developments with smaller lot sizes to deliver a diversity of product, such as townhouse and terrace homes on smaller land sizes in the low to mid-$500,000 range.

“The clear message from the data in this report is that affordable housing is becoming less affordable because of restrictions on supply,” he said.

“The current lack of infrastructure in place to keep up with demand means we currently lack the horsepower required to increase land production to the extent that is needed. The state government needs to step in and open up more land for housing while looking at the infrastructure requirements to ensure it can be developed.”

 Image: Greenfield developments hold the key to solving South East Queensland’s growing housing shortage: Unsplash