What a start to 2024 we’ve had. In less than 60 days we’ve seen some key market movements which have been a long time coming:
- Brisbane’s median house price eclipsed Melbourne (likely briefly)
- Interest rate discussions have finally shifted to when, not if, they will drop
- Government housing summits are starting to produce strategic and measurable outcomes.
Whilst these beacons of change appear positive, there are still significant challenging headwinds. The focus on affordable housing is desperately needed, and the Government’s responses are welcome, but without significant red-tape reduction, project viability will continue to prove challenging for new projects.
Interest rate reductions, whilst providing relief to the mortgage-holding population, are likely to fuel housing price escalations in an increasingly undersupplied market. Challenges such as EPBC, DAF changes and Koala Habitat overlays will continue to delay greenfield approvals, whilst infrastructure provisioning in greenfield corridors will remain the key challenges to greenfield project commencements.
In SEQ, with most land projects being limited to 500-1,000 lots, critical infrastructure is often difficult to resolve. With most ‘super-projects’ spoken for, more action is required to unlock smaller ‘in between’ greenfield sites in key corridors, providing competition and further supply.
Realistically, we need a system that provides certainty and is enabling for supply:
- One greenfield authority (with full authority and a mandate) to direct, manage, fund and implement major greenfield infrastructure, planning and constraints; and
- A proactive approach to catalytic greenfield infrastructure to unlock fragmented land supply and smaller holdings, to encourage competition; and
- A coordinated and proactive environment and habitat offset program by corridor, not by site; and
- Adequate checks and balances around utility provider operations and charges.
On the urban front, pressure is mounting from all angles; TLPI’s for additional height (with strings attached), construction costs remaining at historically high levels, and the Hospital and Olympic program lead a decade-long delivery pipeline. With 2-bedroom apartment averages approaching $1 Million or more, and development effectively cost-prohibited in surrounding inner-suburban areas, we will likely see more financial displacement of families as rents head skywards.
Whilst the current supply shortfall creates interim certainty for industry and employment, long-term strategies and actions that enable catalytic infrastructure and address delivery cost are becoming ever more crucial.
Put simply, greenfield provisioning delays and urban construction cost pressures are our Rock and Hard Place. Producing more 2-bedroom $1 Million apartments, and $900K+ greenfield Home and Land Packages won’t solve our housing supply issues, nor can these issues be resolved quickly.
Whilst changing public sentiment will assist in development barriers addressing housing supply, much more is needed to ensure the longer-term supply is catered for with certainty. The Government’s Homes for Queenslanders plan (summary here) is a great start, but how do we maintain this momentum over the longer term and ensure we don’t end up caught out again?
At Atrio we are full-service property development experts, we live and breathe property. Each day we work with developers, investors and landowners locally, and across Australia to successfully acquire, negotiate and deliver exceptional projects.
If you have a project or property you would like help with, we are always available for a discussion. Get in touch on the link below.
