REAL ESTATE
SEQ HOUSING CRISIS NOW SEVERE
WORDS: Ocean Road Editorial Staff PHOTOGRAPHY Supplied
AVERAGE WAGE EARNERS CAN ONLY AFFORD 5% OF HOUSES SOLD IN THE LAST 12 MONTHS
The housing affordability crisis in South-East Queensland has become so severe that family households with an average wage of $1,954 per week could only afford 5 per cent of houses sold in the last 12 months.
A new RPM Group report highlights the stark realities of the situation, revealing that affordability based on the median SEQ income drops to just 5 per cent for families with children and rises slightly to 7 per cent for those without.
This underscores the urgent need for a comprehensive approach to address the challenges facing Queensland’s housing market, according to the report.
In a sobering analysis of the housing crisis in South-East Queensland, RPM is urging the state government and local councils to focus on facilitating more greenfield communities (residential land) that it believes will allow future generations to get onto the property ladder.
Among the key findings of RPM’s South-East Queensland Greenfield Market Report for November is that the state government’s preferred solution to house more people in apartments is failing to provide affordable new supply.
The report shows that a blowout in construction costs has made new apartments more expensive to build than detached dwellings by a significant margin over the past decade.
“We are supportive of all new supply of dwellings however, whatever governments have been doing until now to get more people into their own homes clearly has not been working effectively,” said RPM’s Queensland Managing Director Clinton Trezise.
RPM sees infrastructure development and enhancing government-designated Priority Development Areas (PDAs) as the key to addressing a lack of housing and improve affordability through the ongoing creation of satellite cities where people can live, work and play without the need to commute long distances.
“Thankfully there are a number of well-established PDA areas such as Yarrabilba, Flagstone, Ripley Valley, and the newly designated Waraba PDA that are providing the next generation of homebuyer with the opportunity to get onto the property ladder,” said Mr Trezise.
“An overall view to providing multiple dwelling types – from apartments to townhouses and terraces to house and land – needs to be delivered to fix the problem.
“Key developers are actively delivering apartments in important locations such as Walker Corporation which will have a streamlined development pathway at Robina, which will provide a mix of affordable and build-to-sell apartments to house people in the community and address the housing crisis.
“Careful consideration must be given to creating the right amenity and infrastructure to develop and attract people to these areas. We need to make communities that are appealing to live in rather than just developing land and hoping that people move there.
“Fortunately, there is a raft of developers in these key locations giving great consideration to making communities both attractive and extremely liveable which is why we are also seeing such high demand in these locations”
“The horse has already bolted on affordability but if we can create these communities with thoughtful infrastructure – such as village and town centres, transport nodes and efficient connectivity – coupled with housing diversity then we are on the right track.”
The RPM report notes that during the Queensland apartment boom between 2014 and 2017, the average value of an approved apartment was comparable to a house with both sitting at around $280,000 per dwelling.
However, the average build cost for an apartment has remained at $670,766 over the past year, which is currently 39 per cent higher than the average cost of $481,709 to build a house.
“This price difference is significant, which highlights new challenges developing affordable apartments compared to traditional houses,” said Mr Trezise.
“It also highlights that the affordability issue is best tackled through the provision of traditional houses and townhouses, which can offer the best value proposition for buyers, or apartments in master planned precincts that have the capacity to deliver affordable designs.”
In the year to September 2024, Queensland approved 34,920 new dwellings, which shows a 3 per cent increase compared to the 33,769 approvals the previous year.
However, RPM says a closer look at the numbers reveals a shift in the types of dwellings being built.
While approvals for houses and townhouses grew by 9 per cent and 5 per cent respectively, apartment approvals dropped by 11 per cent.
“This fall in approvals reflects the ever-increasing pressure from rising construction costs, which is particularly impacting high-rise developments,” said Mr Trezise.
“We simply can’t keep going down this path as we need to improve affordability to more buyers which can be found in detached houses and townhouses which would offer more attractive housing options.
“Lack of affordability has clearly been brought on by lack of land supply and high migration, with desperation to get into the market forcing up prices.”
RPM calls for a targeted approach that will deliver thriving communities which are supported by a raft of urban and social amenities.
“While we are doing quite well in terms of creating satellite cities in South-East Queensland, we need to do more,” said Mr Trezise.
“Much of the developable land in South-East Queensland is locked up due to a lack of infrastructure to service the new communities. This includes essential services such as, roads, water and sewer connections.
“Developers are certainly willing to pay and deliver required infrastructure however in most key growth corridors there is a limit to how far they can develop before the costs to bring these services to sites becomes prohibitive.
“Without some assistance from all levels of government the much-needed supply of affordable land will remain locked up. On a positive note, we are finally seeing some inroads with government working with industry to unlock land in Waraba after 15 years and more supply coming to the Flagstone PDA in the south.”
“It’s equally vital that we learn from the mistakes made in other states where they simply released land for houses that were miles away from shops, public transport, and other community infrastructure.”
RPM estimates that, based on the current estimated median household income of approximately $101,887, or $1,954 per week and factoring in current interest rates, a typical household can only afford a home priced around $490,000 or less.
This calculation is based on usual assumptions, including two incomes, no dependents, a 6.27 per cent interest rate over 30 years, and a 90% loan-to-value ratio.
However, over the past 12 months, only 5 per cent of houses in South-East Queensland were sold within this price range, highlighting the limited availability of affordable homes in the region.
“We can’t just continue talking about affordability and lack of supply as these things are here to stay,” said Mr Trezise.
“PDAs and areas in our fringes offer the greatest opportunities to bring quality supply into the market.
In fact, PDAs are currently addressing some of the issues that have previously occurred in Victoria.”
“It’s important to note that PDAs are also present in metropolitan areas, such as Robina, Maroochydore and Woolloongabba.”
RPM notes that planning at this level needs to be driven by government and backed by local councils.
“With an incoming new state government, we have a great opportunity to take a new approach to the housing crisis. With the right strategy, Queensland could be headed for a new golden age ahead of the 2032 Olympics.”