Land for development is facing an acute shortage in south-east Queensland as government incentives, low interest rates and interstate buyers conspire to turbo-charge demand.
Pressure is growing on the Queensland government to release new land to meet the seemingly insatiable appetite for greenfield lots across the region.
Avid Group general manager Bruce Harper says the supply and demand for land in south-east Queensland has always been a topical issue for developers, councils and the state government.
“The industry feels we’re running short of supply. Even land that’s not likely to be zoned for development for up to 10 years has been optioned,” he says.
Harper says most developers have consumed their developable land during the past 18 months.
“Demand for lots has been way in excess of previous years—in some cases demand has been up to 100 per cent higher than normal. If anything, there’s a shortage of land.”
And the availability of land has plummeted—less than 400 lots were on the market in September, a 70 per cent decline from the 1299 lots up for grabs in September 2020.
There are a number of reasons demand for land has been so strong. One is the federal government’s HomeBuilder $25,000 grant, which has prompted many first home buyers to bring forward plans to purchase a property.
“Sales have been extremely strong. If you can buy a block of land now, it’s usually off the plan, because there’s virtually no developed lots available in south-east Queensland. People are buying lots off the plan that won't be titled for six to 12 months,” says Harper.
CBRE residential development director William Poole says investors have been a driving force in the south-east Queensland property market demand. “Confidence in the housing market and wider economic recovery has spurred elevated activity levels in new dwelling investment and renovations.”
Ultra-low interest rates are the other reason why buyers are clamouring for land.
“It’s created demand we haven’t seen for more than a decade,” says Harper, who believes the market will only continue to strengthen as interstate buyers re-enter the market when state and international borders fully open.
The release of new land in south-east Queensland’s major development corridors and the delivery of infrastructure and services is critical to unlocking future supply.
“Both state and local governments must provide clear infrastructure planning and accelerate land supply,” Poole says.
Looking to future land releases, the Queensland government has anointed Caboolture West as a major growth area.
Other new land releases are likely to be in Logan to Brisbane’s south and Ripley to the west.
“This includes an allocation of funding to deliver critical infrastructure, including a sewerage pumping station. This will be instrumental in kickstarting the delivery of this major expansion area, which is eventually expected to provide approximately 30,000 homes for around 70,000 people,” says Poole.
However, the lacklustre pace at which councils are approving developments, and the slow speed at which infrastructure such as water and power is being connected to greenfield developments, is placing upward pressure on property prices and causing frustration, say some developers.
At the other end of the scale, land around the Gold Coast where there’s little greenfield land for development is likely to be very tightly held.
“That area will come under substantial price growth pressure, as will the Sunshine Coast. There’s very little land other than the holdings at Palmview, of which we are part owner and Aura, held by Stockland, which we are developing,” says Harper.
The Property Council of Australia’s Queensland executive director Jen Williams agrees the availability of readily developable land is a huge issue facing south-east Queensland.
“Some corridors, such as Logan and Ipswich, have large parcels of land ready to bring to market. The planning work has been done in advance and infrastructure arrangements are in place to service expected growth,” says Williams.
“However, other corridors, for example the Gold Coast and Sunshine Coast, are experiencing unprecedented demand for residential land. There simply is not the supply of land available to keep up with the demand for new housing.
“Swift action will be needed over the coming weeks and months to fast-track development applications, streamline the structure planning process, and sort out the funding and delivery of infrastructure to get new supply on the ground.”
Harper notes people have bought blocks of land that won’t settle for six to 12 months. At the same time, development approvals have been slow, effectively hamstringing the market.
“Builders won’t enter a fixed-price contract for something that's not going to be delivered for 12 or 18 months. So the slowdown in build approvals is not an indication demand for land is slowing.
“Developers are often accused of sitting on land banks to increase the price. But if you’re a developer sitting on land now, you’re developing it as quickly as you can because prices are high and demand’s high and you don’t know how long that’s going to last.”
Looking ahead, Poole says Queensland’s affordability advantage over Sydney and Melbourne is an opportunity to reignite a new cycle of land supply releases over the short to medium term.
“We are currently experiencing the highest levels of interstate migration in well over a decade,” he says.
“The south-east Queensland greenfield property market benefited from domestic migration from Sydney and especially Melbourne as a result of Covid lockdowns.
“Despite record price growth in Queensland during the past 12 months, it hasn’t been of the same magnitude as property price hikes in Sydney and Melbourne, which bodes well for the Queensland market medium-term.”
In fact, Poole says, a new cycle of larger scale, high-rise development may not be far off as Brisbane prepares to host the 2032 Olympic.
“Local and interstate developers have continued to grow their development pipeline of sites during the past two years.
“The focus in Queensland is on inner-city nodes that benefit from existing access to services and amenities and are near major infrastructure projects such as Cross River Rail and Brisbane Metro.
“In the meantime, smaller, higher quality developments targeting owner occupiers and downsizers continue to offer opportunities.”