Queensland Affordability Gap Reaches Critical Point

We’re stuffed. That was the initial view of the housing and affordability challenges expressed at The Urban Developer’ s Brisbane Outlook this week. But while they acknowledged the challenges, the speakers did not admit defeat. Queensland has been making strides in housing provision with 5000 homes approved annually for the past five years, keynote speaker, KPMG director of planning and infrastructure economics Terry Rawnsley, told the event on February 13. “Encouragingly, in the last three quarters of 2024 approvals have trended up,” he said. “It was almost looking like, at one stage, Brisbane might have more approvals than Sydney despite being half the size.” With nearly 100,000 more people now in Queensland, we’re still well above the pre-Covid average population growth, Rawnsley told the audience at The Calile Hotel. House prices in Brisbane are expected to rise an estimated 5.1 per cent in 2025 as a result of demand caused by this population growth and increased development costs. But this rise is pushing people out of the market and turning the affordability gap into less a gap and more a Grand Canyon. In 2018-2019, 70 per cent of homes were priced $400,000 to $700,000, which showed “the affordability advantage that Queensland had over New South Wales and Victoria,” Rawnsley said. ▲ KPMG director of planning and infrastructure economics Terry Rawnsley. “Fast forward to 2023-2024, where we’ve had a 30 to 50 per cent increase in construction prices and land prices are going up, and the story is very different.” More properties approved with prices of $1.3 million to $1.4 million reflected the feasibilities that had forced the sector to move up price points, he said. “The problem that’s occurred is that in 2023-2024, there were about 320,000 households in Queensland who earned too much to qualify for social affordable housing, but didn’t earn enough for the development sector to be building products for them,” Rawnsley said. In 2018, there were 180,000 households in that category. “So that’s a big whack of the population for whom there’s no developer .” Affordability and feasibility Panellist Julie Saunders is on the coal face of the issue as the chair of Tier.1 community housing provider Bric Housing. She said investing in this subsector of housing was one of the ways to bridge that gap. But the Australian community housing market was immature, she said, accounting for just 4 per cent of the housing stock, compared with 15 per cent in the United Kingdom. “It’s had a significant lack of investment over the last 20 years from multiple governments. So we do need to grow that market,” Saunders said. ▲ Bric Housing chair Julie Saunders with (from left) The Urban Developer’s Adam di Marco, and fellow panellists Warren Ebert and George Mastrocostas. Fellow panellist George Mastrocostas, founder and managing director of Aniko Group, said that the $700,000 housing product had disappeared and won’t be coming back. But, he said, that’s not to say there isn’t opportunity on the cards. “I’ve heard a few people say that if you’re not able to sell something for $13,000 or $14,000 per square metre you’re not getting it up,” Mastrocostas said. “So now it’s back to first principles, supply and demand, and bringing that back into some form of equilibrium is going to be difficult. “[That’s why] I think the opportunities moving forward are in the number of sites that may start emerging in the market.” Opportunities for 2025 South-East Queensland in particular would offer “great opportunities” emerging this year, Mastrocostas said. “There’s a lot of potential money out there that’s been quite passive over the past few years, wondering if construction costs are going to start coming back off. That passive money is getting a little antsy.” Mastrocostas said Aniko Group’s Landmark project was an example of this, acquiring the site for $30 million for a planned 1000 units, 14,000sq m of commercial and a five-star hotel. “Those opportunities are possibly going to start being dropped at the market this year,” he said. At the affordable end of the market, indications from the Federal Opposition are that Housing Australia—and thus its Future Fund program of social and affordable housing—are that it may not survive a change of government. But there was still optimism, Saunders said, at a state level where the indicators of support are stronger. ▲ The Urban Developer ’s Brisbane Outlook event 2025 at The Calile. “The new State Government is saying they want to harness the sector more. What that means, we’re not sure yet,” Saunders said. “But the Premier spoke about the softening of urban footprint lines to allow more greenfield, which is where the viability is at the moment. “So there’s more work to be done unlocking that, deregulating that space and incentivising the infrastructure element, already announcing $2 billion to unlock supply.” Elsewhere, panellist Warren Ebert, chief executive of Sentinel Group, said the best rule of thumb for 2025 was “buy whatever everyone else wants to sell”. “What everyone else likes I just don’t want to be buying, it’s too expensive. “So buy as much Brisbane office as you can. I just don’t see how we can build anything, I don’t know how we’re going to do $100 billion worth of projects for the Olympics, and I just don’t see that CBD office, or any office, is going to be on the priority list. “There are some great opportunities and that is by far the standout.”

Construction
Clare Burnett
Thu 13 Feb 25

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ConstructionClare BurnettThu 13 Feb 25

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