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'Perfect storm': The land supply crisis driving up SEQ house prices

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Developers in south-east Queensland are growing increasingly vocal over what they say are looming land supply shortages in growth areas that are likely to drive house prices up further.

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Their fears are the reason behind Deputy Premier and State Development and Planning Minister Steven Miles last week ordering his planners to identify a “pilot site” that will demonstrate how delivery of housing lots can be accelerated.

Official figures show supply is getting extremely tight in Redlands, parts of Moreton Bay and on the Gold Coast and Sunshine Coast.

The State Government has decided it needs to address the issue after discovering it takes an average of nine years for new masterplanned communities to be readied for new residents. Miles’ department is working on how to reduce that timeframe down to three years.

However, it is understood the Government remains reluctant to bow to demands from some developers to expand the so-called “urban footprint” to allow for new “greenfield” communities to soak up demand.

And local councils insist that their decisions are guided by the Government’s growth plan for the region which seeks to channel new development into certain areas.

The South-East Queensland Regional Plan, which seeks to influence how the region accommodates the estimated 75,000 extra residents it will attract each year, requires every council area to have a minimum of four years supply of housing land ready to go to market.

However, the Government’s latest land supply and development monitoring report, quietly released late last year, shows that while the region has more than enough planned housing supply to satisfy demand in the medium term, there are looming bottlenecks in certain areas.

Developers see the problem as particularly acute on the Gold Coast, which has just 1.8 years’ supply of approved lots, the Sunshine Coast (2.2 years) and Redlands (2.6 years). Brisbane is only a little better with three years supply of uncompleted lot approvals.

This compares with 6.6 years of supply in Ipswich and five years supply in Logan. These two council areas have the bulk of the region’s new masterplanned communities like Ripley Valley and Yarrabilba.

The latest version of the regional plan estimates south-east Queensland’s population will increase to 5.3 million by 2040, a figure that will require 30,000 new homes to be built each year.

However, these estimates were made in 2017 and do not take into account the surge in interstate migration in recent years or the impact of the pandemic on where people want to live.

Queensland Treasury is currently working on new post-COVID population projections for the state.

The developers’ position has been backed by the Government’s independent Housing Supply Expert Panel, which has called for swift action from state and local governments to resolve the issue.

The panel chair and director of Urbis, Julie Saunders, has warned that land supply shortages are a “repeating trend” in south-east Queensland.”

“At a time when leadership from government is crucial, bold moves are required to stimulate construction and ensure adequate land supply is available, both the State and local governments need to take a more instrumental role in areas facing this kind of bottleneck in land supply,” she said in a message accompanying the land supply monitoring report.

The panel has suggested no less than 17 actions for both levels of government to pursue to ensure adequate land supply, including unlocking under-used areas of the existing urban footprint.

The land supply issue is complicated, with land banking, fragmented ownership of land, density concerns and other factors affecting the smooth supply of housing lots.

Miles last week announced a new specialist team to tackle housing and infrastructure development, saying Government and local councils needed to keep up with the demand for land and not see families priced out of the market.

He told State Parliament on Tuesday that he had asked the team to identify a pilot site, the first new growth area, by the end of the month “because there is no time to wait”.

Development lobby group the Urban Development Institute of Australia issued a report last November saying that high demand and limited supply was driving up house prices.

The report, titled The Perfect Storm, said developers were reporting it was increasingly difficult to find land parcels of a “viable size” and that development approvals were becoming “less certain”.

“A continuation of the current approach will leave Queenslanders being forced to compromise or unable to purchase a home at all,” the report said.

UDIA Queensland chief executive Kirsty Chesser-Brown said the minister’s announcement was a “great first step” but more needed to be done.

She said the land supply and development monitoring report confirmed anecdotal evidence from her members that supply was tightening.

“What we are facing really is a perfect storm of returning ex-pats, strong interstate migration and the effects of the stimulus measure which has favour detached housing,” she said.

Local Government Association of Queensland chief executive Greg Hallam said the Government’s own land monitoring report showed the regional plan was working.

“In the growth corridors there’s a substantial supply of land there,” he said.

“It doesn’t mean to say the developer can develop or they can develop what they want to but that’s the nature of the regional plan.”

 

 

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