2% rental market trigger

This week I have included two tables about the south east Queensland rental market.

Table 1: Vacancy rate + Median weekly apartment rents, June 2020

Local authority

area

Vacancy rate Two bed apartments Four bed houses Three bed townhouses
Brisbane 2.4% ↓ $415 ↓ $520 ↓ $420 →
Gold Coast 3.2% ↑ $430 ↓ $520 ↑ $450 →
Ipswich 1.2% ↓ $260 ↑ $375 ↑ $325 ↑
Logan 2.3% ↓ $290 → $400 → $330 →
Moreton Bay 1.2% ↓ $295 ↑ $430 ↑ $350 ↑
Noosa 2.0% ↓ $420 ↑ $620 ↑ $585 ↑
Redland 1.1% ↓ $365 ↑ $500 ↑ $410 ↑
Sunshine Coast 1.2% ↓ $380 ↑ $540 ↑ $440 ↑
Matusik Ready Reckoner Reports, table 6.  Arrows indicate movement over the last 12 months.

Table 2: Change in median weekly rents over the last ten years

Local authority

area

Two bed apartments Four bed

houses

Three bed townhouses
Brisbane 15% 16% 11%
Gold Coast 26% 18% 25%
Ipswich 8% 14% 10%
Logan 21% 11% 12%
Moreton Bay 13% 19% 13%
Noosa 31% 28% 38%
Redland 18% 14% 19%
Sunshine Coast 27% 26% 22%
Matusik Ready Reckoner Reports, table 6.  Total change between June 2010 and June 2020.

Our research has found that a vacancy rate under 2% suggests a significant shortfall of suitable rental accommodation.  Typically, when the vacancy rate is under 2% weekly rents start to rise.

This is lower than the usually promoted 3% to 4%.  This is because many tenants monitor vacancies proactively these days.  Digital technology helps facilitate this.  Gone are the days of a printed ‘for rent’ agency list being the main way renters found out about vacant accommodation.  Many tenants have the ability to pounce on available space; hence the vacancy rate trigger point has dropped to under 2%.

The rental market is also a key driver behind the local property cycle.

For example, during the stagnation phase, the rental vacancy rate is steady.  Yet a fall in rental stock availability is often the first trigger helping push a market into a recovery phase.

During the recovery phase, the rental vacancy rate starts to fall.   Weekly rents may still be falling or stagnant, but typically start to rise once the vacancy rate shows consistent falls and/or falls below 2%.

When the local market is in the upswing phase, the rental vacancy rate is often tight and weekly rents show regular annual growth.

And more often than not, when the vacancy rate rises and remains high, weekly rents start to fall, helping downturn the local housing market.

To find out more about the local rental market and property clock positions get a Matusik Ready Reckoner Report – new, improved and just $55 per report or $330 if you buy all eight SEQld reports, saving you 25%.

Back to the Future Part II

The sequel to the film Back to the Future tells the story of Marty McFly and Dr. Emmett “Doc” Brown and their travels from 1985 to 2015 to prevent Marty’s son from sabotaging the McFly family’s future.  Their arch-nemesis Biff Tannen steals Doc’s DeLorean time machine to alter history for his benefit – he purchases an almanac, containing the results of major sporting events from 1950 to 2000 – the duo must return to 1955 to restore the timeline.

Okay enough Hollywood preamble envisage you had a south east Queensland residential property almanac covering the ten years between 2010 and 2020.  Imagine if you could go back to 2010, where would put your housing dollar?

Two tables this post.

Table 1: Detached houses, south east Qld, 2010 v 2020

Local authority

area

2020 median price Ten year change
$ %
Brisbane $705,000 $170,000 32%
Gold Coast $665,000 $152,000 30%
Ipswich $359,000 $33,000 10%
Logan $435,000 $55,000 14%
Moreton Bay $479,000 $70,000 17%
Noosa $750,000 $230,000 44%
Redland $665,000 $95,000 17%
Sunshine Coast $630,000 $155,000 33%
Matusik Ready Reckoner Reports, table 3.

Table 2: Attached dwellings, south east Qld, 2010 v 2020

Local authority

area

2020 median price Ten year change
$ %
Brisbane $450,000 $40,000 10%
Gold Coast $440,000 $60,000 16%
Ipswich $326,000 $55,000 20%
Logan $267,000 -$13,000 -5%
Moreton Bay $347,000 $9,000 3%
Noosa $686,000 $251,000 58%
Redland $410,000 $50,000 14%
Sunshine Coast $435,000 $65,000 18%
Matusik Ready Reckoner Reports, table 4.

No need to comment, the tables speak for themselves.

Get a copy of your own SEQld almanac – a Matusik Ready Reckoner Report – new, improved and just $55 per report or $330 if you buy all eight SEQld reports, saving you 25%.

 

13 million!

COVID19 has reignited the debate about product size, with some jumping on the bandwagon advocating that there will be a lot more demand for smaller housing products and, in particular, studio and one-bedroom apartments.

Given it costs much more to build and supply small residences when compared to larger housing floorplates, I think it would make more sense to provide more homes that can be satisfactorily shared rather than single roosts.

Also, one place which seems to have escaped much attention is the underutilisation of our existing housing stock.

Three tables this post.

Table 1: Housing utilisation by product type, Australia

Housing product Bedrooms needed Spare bedrooms
One + None One Two Three +
Detached house 3% 13% 30% 37% 17%
Townhouse, villa or duplex 4% 22% 47% 25% 2%
Apartment 9% 44% 41% 6% 0%
Average 4% 18% 33% 32% 13%
Matusik + ABS 41300, table 7.1.

Table 1 tells me four out of five (78%) Australian households have one or more spare bedrooms.  Even smaller digs have spare capacity.

Table 2: Housing utilisation by tenure, Australia

Housing tenure Bedrooms needed Spare bedrooms
One + None One Two Three +
Owner resident 2% 12% 31% 37% 18%
Private landlord 7% 31% 37% 19% 4%
Public housing 6% 35% 41% 16% 2%
Average 4% 18% 33% 32% 13%
Matusik + ABS 41300, table 7.1.

Table 2 outlines, as one would expect, spare capacity in our owner resident homes, but private landlords have a lot of spare bedrooms too and many are not maximising their rental returns.

Table 3: Housing utilisation by household type, Australia

Household type Bedrooms needed Spare bedrooms
One + None One Two Three +
Family, dependent kids 6% 27% 43% 21% 3%
Multi-generational family 26% 35% 21% 12% 6%
Couple 0% 4% 19% 45% 32%
Lone person 0% 13% 30% 40% 17%
Average 4% 18% 33% 32% 13%
Matusik + ABS 41300, table 7.1.

Table 3 tells me that people living alone or in a couple household have a higher proportion of spare bedrooms when compared to families with children at home.

Table 3 also shows that one in four (26%) multi-generational homes want more sleeping quarters to house adult relatives.

End note

There are currently about 10 million households in Australia, which house about 13.5 million spare bedrooms.

We should be exploring housing incentives and relaxing regulations to maximise the use of our existing homes.

It would help if the town planning mindset changed from dwellings per hectare to people per hectare.  If such a measure was a planning benchmark, then we would do much more to capitalise on our existing infrastructure and underutilised existing housing stock.

Recent buyers

Many seem to confuse our demographic shape with housing market activity.

A classic example is that baby boomers – due to the large size of this demographic cohort – is a major home buyer group.

Yet an analysis of recent buyer trends tells a different story.

Three tables this post.

Table 1: Recent buyers by product type, Australia

Housing product First home buyer Changeover buyer
New dwelling Established dwelling New dwelling Established dwelling
Detached house 65% 80% 81% 85%
Townhouse, villa or duplex 22% 10% 8% 11%
Apartment 13% 10% 11% 4%
Matusik + ABS 41300, table 9.5.

Table 1 tells me that most buyers still prefer detached houses.  One exception is that more first home buyers are starting to buy something semi-detached or an apartment.

Table 2: Recent buyers by age group, Australia

Age group First home buyer Changeover buyer
New dwelling Established dwelling New dwelling Established dwelling
Under 24 years 3% 6% 0% 0%
25 to 34 years 53% 47% 12% 14%
35 to 44 years 30% 30% 26% 26%
45 to 54 years 12% 12% 20% 23%
55 to 64 years 2% 2% 16% 16%
Over 65 years 0% 3% 26% 21%
Matusik + ABS 41300, table 9.5.

Table 2 shows, as one would expect, that most first home buyers are aged between 25 and 34 years of age.

Most ‘changeover’ buyers are aged under 54 years, with empty nesters and baby boomers make up between 30% and 40% of the housing market depending on the age of the housing being purchased.

Table 3: Recent buyers by household type, Australia

Household type First home buyer Changeover buyer
New dwelling Established dwelling New dwelling Established dwelling
Family, dependent kids 52% 38% 44% 41%
Multi-generational family 5% 12% 9% 17%
Couple 23% 23% 29% 26%
Lone person 20% 17% 18% 16%
Matusik + ABS 41300, table 9.5.

Table 3 tells me that most home buyers are families with children at home.  Lone persons aren’t as active as their demographic shape would suggest.  And in contrast, multi-generational households account for more sales – and especially when it comes to established homes – than their cohort size.

Less is more

Below are three rare property market indicators – when they fall it is better than when they are increasing.

Chart 1 shows the number of dwellings approved, but not yet started.

Whilst the number of attached dwelling non-starts have fallen – which is a good thing – the 21,500 not yet commenced attached dwellings (which are mostly mid-to-high rise apartments) account for a third (32%) of all new attached dwellings approvals last year.

In contrast, the 9,000 approved but not yet started detached houses accounts for just 9% of last year’s total detached housing approvals.  And with HomeBuilder focusing, by default, on new detached housing builds I expect this spare capacity to drop dramatically over coming months.

Any future extension of the HomeBuilder incentive needs to embrace new attached dwelling supply and especially social housing.

 Table 1: Major SEQ municipalities: Attached dwellings approved, not yet started

Municipality 2011 2019 % change
Sunshine Coast 3,154 7,941 152%
Moreton Bay 5,042 8,020 59%
Brisbane 29,014 57,061 97%
Toowoomba 1,016 1,946 92%
Logan 3,716 7,917 113%
Ipswich 2,875 3,089 7%
Gold Coast 12,213 32,392 165%
South East Qld 59,998 121,578 103%
Matusik + Queensland Government.  Financial years.

Table 1 outlines the number of attached dwellings approved but not yet stated in 2011 and 2019 across the major municipalities in south east Queensland.  The size of these non-starts has doubled across SEQ since 2011, with the Sunshine and Gold Coasts seeing the biggest increases.

The relatively high construction costs of apartments means prices are often higher than the local market is accustomed to, rates of sale are slow, and rental yields generally poor.

In addition, there is a mismatch between the type of new attached dwellings being delivered and what the local market really wants.

As a result, many of these new attached dwelling projects are no longer viable.  They often need a major product and financing overhaul.

My third indicator is the number of new housing projects either postponed or abandoned since the start of the COVID19 restrictions.  Since March this year:

  • 488 new residential projects have been put on ice in New South Wales – of which 453 or 93% were for attached dwellings and just 35 involved land projects;
  • 512 new housing projects have stopped in Victoria – of which 463 involved attached dwellings (90%) and 49 (10%) were for subdivisions; and
  • In Queensland the number of postponed or abandoned new housing projects has totalled 244 since March, of which 204 (83%) involved attached housing and 40 were land based housing estates.

I expect these numbers to increase, as market demand contracts and developers face harder financial hurdles.

In all three cases, less is more.

Biggest impacts

According to a new release by the ABS, half (54%) of the Australian population think that things will return back to normal within six months.  The result was 51% in Victoria.  Only one in ten (11%) think that things will never return to what they were like before COVID19.

As that survey was a few weeks back, I wonder if we are that optimistic now.

Another survey, this one an established and, for mine, a more trusted poll shows that most of us think that the economy will remain in a poor state for the next 12 months.  Yet this ANZ-Roy Morgan Consumer Confidence sampling suggests that very few think things will remain economically constrained in five years’ time.

So, things look very rough now, but most still believe conditions will improve in the future.  I too think this shall pass.  But when, and under what conditions, have always been important questions.

But for now, it remains hard, especially if you live in Victoria.  I have had to endure a travel related 14-day lockdown over the last two weeks.  It wasn’t a bed of roses.  But it’s all thorns if you have to ensure six-plus weeks of hard isolation.

In my recent Master Class I outlined the issues that experienced property industry practitioners anticipate will have the biggest impacts on the housing market over the next 12 months.  It started quite a debate.

This quarterly survey of 370 individuals by NAB allows for multiple responses and their June quarter poll found:

  • 80% believe that rising unemployment and job uncertainty will have the biggest short-term impact on the housing market, followed by
  • 76% said lower consumer confidence,
  • 60% difficulty in buyers (and developers) getting finance,
  • 60% the end (and tampering off) of JobKeeper and JobSeeker payments,
  • 48% lower migration,
  • 20% increased supply of rental as short-term rentals enter the long-term market,
  • 19% increased demand for regional living including lifestyle, sea change and tree change choices,
  • 18% downward pressure on construction activity from lower demand, and
  • 17% reduced demand for apartments and inner city dwelling due to increased working from home.

It is interesting what the housing industry thinks will have the most impact and which issues they consider to be less serious.

I would have placed ‘difficulties accessing finance’, ‘lower migration’ and ‘downward pressure on construction activity’ higher up my list.

And whilst I do think this impact will be a relatively short-term one in terms of its current volumes – and more concentrated on older households over the medium to long-term – many ‘lifestyle’ regions, aren’t ready for the influx and its potential impact.

In these lifestyle locations properties are currently selling within weeks, many via video inspections and almost all are being bought by eastern seaboard capital city buyers.

13

The third post of our three part series on SEQ urban land development.

This week I look at new land development supply in more detail.

Another three tables this week.

Table 1: Major SEQ municipalities: Total urban residential allotment approvals

Years ending

March

Municipalities
Sunshine Coast Moreton Bay Brisbane Redland
2016 2,513 6,371 2,639 458
2017 2,727 6,039 2,789 355
2018 1,361 3,585 2,797 660
2019 2,242 1,690 2,908 423
2020 890 1,592 2,230 548
Years ending

March

Logan Ipswich Gold

Coast

SEQld
2016 3,475 3,315 2,189 20,960
2017 3,235 3,651 2,412 21,208
2018 5,418 2,598 2,165 18,584
2019 3,206 2,565 1,202 14,236
2020 4,960 1,205 279 11,704
Matusik + Queensland Government.  Total urban residential allotment approvals between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings.

Table 2: Major SEQ municipalities: Total approved urban residential projects

Years ending

March

Municipalities
Sunshine Coast Moreton Bay Brisbane Redland
2016 79 187 532 89
2017 79 180 535 85
2018 92 144 560 65
2019 78 145 475 79
2020 64 101 471 69
Years ending

March

Logan Ipswich Gold

Coast

SEQld
2016 139 83 117 1,226
2017 160 76 127 1,242
2018 144 92 108 1,205
2019 120 79 103 1,079
2020 77 59 80 921
Matusik + Queensland Government.  Total approved urban residential projects to supply new allotments between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings.

Tables 1 and 2 tell me:  That new land development approvals have fallen substantially across SEQ over the last five years.  The fall in new future land supply is most marked in several municipalities including the Gold Coast, Sunshine Coast, Moreton Bay and Ipswich.

There has been a fall in the number of new approved projects in Logan.

Table 1 outlines total residential allotment approvals whilst table 2 shows that number of new approved land projects.

Table 3: Major SEQ municipalities: Development approvals by size

Municipality Total approved allotments Total development projects
< 10 lots 11-50 lots > 50 lots < 10 lots 11-50 lots > 50 lots
Number of allotments + number of projects
Sunshine Coast 105 157 628 48 8 7
Moreton Bay 199 481 912 77 13 9
Brisbane 663 1,377 190 413 38 3
Redland 104 128 316 61 2 3
Logan 141 75 4,744 55 5 17
Ipswich 93 240 872 43 11 5
Gold Coast 120 159 0 76 4 0
South East Qld 1,425 2,617 7,662 773 81 44
% distribution
Sunshine Coast 12% 18% 70% 77% 13% 10%
Moreton Bay 13% 30% 57% 76% 15% 9%
Brisbane 30% 62% 8% 88% 11% 1%
Redland 19% 23% 58% 89% 7% 4%
Logan 2% 2% 96% 71% 7% 22%
Ipswich 8% 20% 72% 73% 19% 8%
Gold Coast 43% 57% 0% 95% 5% 0%
South East Qld 12% 22% 66% 86% 9% 5%
Matusik + Queensland Government.  Total urban residential allotment approvals between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings. Year ending March 2020.

Table 3 tells me:  That most of the new land projects across SEQ are now small developments, with 86% holding under 10 allotments.  These smaller projects, however, hold just 12% of the total approved allotments.

Most new land – some 66% – is held in larger new projects, holding over 50 allotments apiece.  However, there were just 44 ‘large’ projects approved across SEQ over the last 12 months.

The average size of a new land estate across SEQ is now just 13 allotments!

Three shorts

Round two of our three part series on SEQ urban land development.

This week I look at demand and supply.

Three tables this week.

Table 1: Major SEQ municipalities: Urban land demand v supply #1

Municipality Allotment demand* Allotment

supply #1

Supply status

in years

Sunshine Coast 1,668 3,662 2.2
Moreton Bay 2,076 3,162 1.5
Brisbane 2,558 1,792 0.7
Redland 593 553 0.9
Logan 1,574 5,585 3.5
Ipswich 2,048 6,253 3.1
Gold Coast 2,175 1,402 0.6
South East Qld 12,692 22,409 1.8
Matusik + Queensland Government.  * Average annual urban residential allotment registrations over the last five years – see table 6.  Supply #1, uncertified lots with operational works approval.

Table 1 tells me:  That there is under two years of actual potential new land supply across SEQ and the supply is tightest on the Gold Coast, Brisbane and in Redland.

This supply is way too short!

Table 2: Major SEQ municipalities: Urban allotment demand v supply #2

Municipality Allotment demand* Allotment

supply #2

Supply status

in years

Sunshine Coast 1,668 5,319 3.2
Moreton Bay 2,076 10,018 4.8
Brisbane 2,558 6,641 2.6
Redland 593 1,292 2.2
Logan 1,574 12,984 8.2
Ipswich 2,048 13,900 6.8
Gold Coast 2,175 4,197 1.9
South East Qld 12,692 54,351 4.3
Matusik + Queensland Government.  * Average annual urban residential allotment registrations over the last five years – see table 6.  Supply #2, total allotments approved yet not developed.

Table 2 tells me:  That when factoring in the total approved urban subdividable land across SEQ – being 54,350 allotments – this supply equates to just over 4 years supply.

Total approved allotment supply remains tight on the Gold Coast, Redland and Brisbane.  Logan and Ipswich have more potential supply.

And again, this supply is too short! 

Table 3: Major SEQ municipalities: Urban allotment demand v supply #3

Municipality Supply #2 status

in years

Supply #3 Total supply status in years
Allotment demand* Allotment

supply

Supply status in years
Sunshine Coast 3.2 1,668 994 0.6 3.8
Moreton Bay 4.8 2,076 3,970 1.9 6.7
Brisbane 2.6 2,558 2,596 1.0 3.6
Redland 2.2 593 827 1.4 3.6
Logan 8.2 1,574 12,917 8.2 16.4
Ipswich 6.8 2,048 8,535 4.2 11.0
Gold Coast 1.9 2,175 4,265 2.0 3.9
South East Qld 4.3 12,692 34,104 2.7 7.0
Matusik + Queensland Government.  * Average annual urban residential allotment registrations over the last five years – see table 6. Supply #3, new urban residential supply over the next five years.

Table 3 tells me:  That the 34,100 new allotments expected to be ready for development over the next five years equates to just 2.7 years of demand.

When factoring in the current potential land supply (54,350 allotments) with these possible 34,100 additional allotments, sees an undersupply of urban subdividable land on the Brisbane and Redland (3.6 years supply), on Sunshine Coast (3.8 years) and on the Gold Coast too (3.9 years).

Even Moreton Bay with 6.7 years allotment supply, just has enough future stock.

This leaves Ipswich and Logan as the only two major SEQ corridors with adequate land supplies.

The third short in a row!

End comment

Facing such limitations one would think that it was high time to open up more land; rethink existing constraints; decentralise the state government workforce; reverse the townhouse development ban in Brisbane City Council and generally encourage middle-ring and suburban infill development including backyard housing solutions.

Land Ahoy!

The HomeBuilder package has helped generate a lot more buyer inquiry for vacant land and new house/land packages.

The month of June was said to be hectic.  It is likely that the interest will remain high for the rest of calendar 2020 as well.

What is yet to be seen is if the inquiry and associated holding deposits turn into contracts.

I suspect that there will be a high fallout rate as lenders look hard to each borrower’s employment status, future earning capacity, lifestyle spending and debt profile.

That said, this week is the first post of a south east Queensland land market trilogy.

My last three part series on jobs was quite popular.  So here we go again.

Two tables this week.

Table 1 looks at the suburban distribution of new land development across SEQ and table 2 looks at suburban vacant land and house/land prices and sales.

Table 1: Major SEQ municipalities: Urban allotment development distribution

Municipality + suburb Total lot registrations* Market share
Municipality SEQld
Sunshine Coast
Caloundra West 699 47% 6%
Landsborough 285 19% 3%
Nambour 139 9% 1%
Total 1,123 75% 10%
Moreton Bay
Scarborough-Newport 364 17% 3%
Murrumba Downs-Griffin 231 11% 2%
North Lakes-Mango Hill 208 10% 2%
Caboolture South 162 8% 1%
Rothwell-Kippa Ring 118 6% 1%
Morayfield East 116 6% 1%
Bribie Island 101 5% 1%
Burpengary 100 5% 1%
Total 1,400 67% 13%
Brisbane
Pallara-Willawong 473 19% 4%
Rochedale-Burbank 202 8% 2%
Upper Kedron-Ferny Grove 140 6% 1%
Forest Lake-Doolandella 126 5% 1%
Wynnum West-Hemmant 125 5% 1%
Total 1,066 43% 10%
Redland
Thornlands 235 55% 2%
Logan
Boronia Heights-Park Ridge 827 42% 8%
Wolffdene-Bahrs Scrub 346 17% 3%
Chambers Flat-Logan Reserve 224 11% 2%
Edens Landing-Holmview 154 8% 1%
Total 1,551 78% 14%
Ipswich
Ripley 543 40% 5%
Collingwood Park-Redbank 176 13% 2%
Redbank Plains 164 12% 1%
Bellbird Park-Brookwater 125 9% 1%
Springfield 109 8% 1%
Total 1,117 83% 10%
Gold Coast
Pimpama 422 35% 4%
Coomera 299 25% 3%
Ormeau-Yatala 139 12% 1%
Oxenford-Maudsland 104 9% 1%
Total 964 81% 9%
Total SEQld 7,456 68%
Matusik + Queensland Government.  * Urban residential allotment registrations between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings.  Year ending March 2020.

Table 2: Major SEQ municipalities: House + land package & vacant land sales

Municipality + suburb House + land package sales Vacant land sales
No $ No $ $/m2
Sunshine Coast
Caloundra West 103 $585,500 253 $247,750 $691
Landsborough 12 $465,000 201 $269,500 $732
Nambour 20 $499,000 122 $250,000 $381
Moreton Bay
Scarborough-Newport 28 $615,500 155 $334,000 $897
Murrumba Downs-Griffin 22 $539,000 167 $285,000 $732
North Lakes-Mango Hill 31 $525,000 160 $292,500 $760
Caboolture South 11 $320,000 74 $204,000 $428
Rothwell-Kippa Ring 8 n.a. 34 $231,000 $769
Morayfield East 7 n.a. 168 $185,000 $485
Bribie Island 5 n.a. 125 $336,000 $575
Burpengary 15 $451,400 83 $239,500 $628
Brisbane
Pallara-Willawong 65 $570,000 241 $305,000 $775
Rochedale-Burbank 25 $1,058,000 234 $470,000 $1,145
Upper Kedron-Ferny Grove 6 n.a. 63 $410,000 $874
Forest Lake-Doolandella 8 n.a. 83 $270,000 $794
Wynnum West-Hemmant 4 n.a. 54 $399,000 $886
Redland
Thornlands 10 $525,000 107 $320,000 $744
Logan
Boronia Heights-Park Ridge 92 $453,500 325 $232,500 $544
Wolffdene-Bahrs Scrub 17 $471,750 210 $221,000 $541
Chambers Flat-Logan Reserve 28 $450,000 180 $215,000 $546
Edens Landing-Holmview 10 $462,500 79 $229,000 $558
Ipswich
Ripley 80 $420,000 340 $205,500 $525
Collingwood Park-Redbank 8 n.a. 132 $188,000 $398
Redbank Plains 12 $367,500 31 $192,000 $456
Bellbird Park-Brookwater 14 $489,000 129 $245,000 $593
Springfield 1 n.a. 17 $275,750 $655
Gold Coast
Pimpama 71 $513,000 341 $271,000 $640
Coomera 12 $610,000 246 $285,000 $678
Ormeau-Yatala 4 n.a. 113 $255,000 $606
Oxenford-Maudsland 6 n.a. 91 $297,500 $450
Matusik, Price Finder + Queensland Government.  Matusik estimates.  A new house and land package are defined as a detached house dwelling on a newly registered block of land between 140m2 and 2,500m2.  Vacant urban land sold between 140m2 and 2,500m2.  Year ending March 2020.

Matusik, Price Finder + Queensland Government.  Matusik estimates.  A new house and land package are defined as a detached house dwelling on a newly registered block of land between 140m2 and 2,500m2.  Vacant urban land sold between 140m2 and 2,500m2.  Year ending March 2020.

Comments

Table 1 tells me: that just under 70% of the new urban allotment registrations across SEQ are held in just 30 suburbs (SLA2 ABS definitions).  There are some 320 such SLA2 areas across SEQ.

These suburbs also dominate land development within their respective municipal areas.  That market share ranges from 43% in Brisbane to 83% in Ipswich.

New land subdivision activity across SEQ is now limited to a few development corridors.

Table 2 shows: that there is a wide range of price points across the SEQ land market with the most expensive land on a $/m2 basis selling in Rochedale in Brisbane.

Yet vacant land can still be bought for under $500/m2 in several outer SEQ suburbs including Nambour, Caboolture West, Morayfield East, Collingwood-Redbank, Redbank Plains and Bellbird Park.

Upfront or later?

Introduction

COVID19 and the Australian financial assistance packages – in particular JobKeeper and HomeBuilder – have sparked quite a bit of commentary about better planned local communities and what ingredients make better new suburban subdivisions.

I like to think we are a bit ahead of the curve and over recent years my firm has undertaken various investigations into the benefits of advanced community infrastructure rollouts in new housing estates.

Below is a precis of our general findings.

Background

Most experienced land developers will sell to as many markets as possible – i.e. spec-builders, owner residents and investors – and will also try and keep their marketing programmes as local as possible.

The better land developers also limit the amount of investment selling in their estates.

Often the investment limit is between 20% and 30%.

Local sales are much cheaper than sales made further away.

Sales to owner residents are also much cheaper than investment selling.

The marketing and sales costs for a local owner resident sale is often pegged at 3% to 5% of the land price, whilst interstate/overseas marketing and sale costs can exceed 10%.

These costs are passed onto the end buyer, reducing housing affordability.

Owner residents are also more cautious buyers, wanting to see at least some of the estate, before they purchase, whilst in many cases investors – and especially those living some distance from the estate itself – elect to be ‘early adaptors’, buying in the initial land releases in anticipation of land prices rising as the estate progresses.

Early community infrastructure is often recreational spaces, although some developers  provide amenities such as cafes for local residents, at an early stage of the estate’s development.

However, recreational spaces generally need to be more than just a park; equipment should be provided to encourage sporting pursuits and local community engagement, via children play equipment, BBQs and shaded seating arrangements, street art and signage pointing out local things of interest and as focal point for new residents in the estate.

Importantly, the provision of a ‘standard’ park – largely being just grass – isn’t enough to qualify as community infrastructure.  The community infrastructure needs to allow for a range of activities including cultural, educational, recreational and sporting pursuits.

Such estates have a high local amenity.

Some key findings

More local sales

In brief, such early facilities help a developer demonstrate the quality of the estate which then has higher appeal to owner residents and local buyers, including investors.

A recent review of nine major land estates across south east Queensland found that those estates which don’tprovide early community infrastructure rely heavily on interstate marketing and sold close to half (45% on average) their stock to investors.

We also found that investor interest in estates with high local amenity is still there, but at a much more sustainable level, averaging 24% across the relevant land estates investigated.

Fewer rental moves and resale turnover

There is a strong trend towards higher rental and resale turnover in land estates without upfront community infrastructure.

On average some 38% of rental households across the Brisbane region change residence each year.

Also, a detached house resells, again on average, every nine years.  The sales turnover is less for owner-residential abodes, averaging close to 15 years, whilst for typical housing investment housing stock, the average time between resales is seven years.

When it comes to renters the rate of annual tenant turnover exceeds 70% in those new land estates with none or very limited community infrastructure.

Our work also found that a third of the new homes in such estates with limited local amenity where resold or on the market for resale within three years of the original developer or builder sale.

End note

Whilst the provision of such facilities costs the developer, this cost is often less than paying higher marketing and sales commissions to secure non-local sales and investment transactions.

However, despite such evidence, some developers have an ‘investment’ sales model and rely heavily on investment selling.

The provision of early facilities or any facilities at all, in their minds, is a waste of money and hence they are reluctant to provide such in their estates.

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