This post outlines the current state of play when it comes to the SEQ land market.
This missive holds two charts plus a missive extra table at the end of the post.
A quick summary
- SEQ land sales have dropped sharply over the last 12 months. Yet land values continue to rise on an end price, also on a $/m2, basis.
- Traditionally, like the dwelling market, a decline in land sales means weaker land prices, but this doesn’t seem to be happening at present across SEQ.
- Our work suggests that; despite both state and local government assurances that there is amble land available for urban development in SEQ; on the ground this really isn’t the case.
- The continued decline in median lot sizes also suggest that development land supply is tightening up.
Recent development trends
Our review of residential development trends over the past three years across SEQ has found:
- 75% of all residential development applications in SEQ are for projects with under 10 dwellings, yet these small developments, when combined, make up just 5% of all the new dwelling starts.
- In contrast, new projects with over 50 dwellings supply 80% of the new homes across SEQ, yet these larger projects account for just 10% of all development applications.
- Some 45% of the apparent land supply available is currently set aside for medium to high density residential development, whilst 55% is allowed for detached dwellings and infill product like townhouses, duplexes and dual+ occupant housing. This supply assumption is at odds with current local market trends and does not fit SEQ’s future domestic demographic shape.
- A review of approved residential projects that are unlikely to proceed finds that a third of them, across SEQ, involve higher density development, whilst just 5% are for detached housing/townhouses.
- Furthermore, the smaller the project the less likely it is to proceed. At present some 30% of approved projects with under 10 dwellings is stalled, whilst this proportion (as a count of total potential dwellings supplied) is just 7% for approved developments with over 50 dwellings apiece in SEQ.
Land supply constraints
My simple summation here is that there aren’t enough major development land parcels to cater for demand in SEQ. The current rationale is that smaller residential projects and higher development yields will cater for an increasing proportion of SEQ’s housing stock. Yet recent trends suggest that this isn’t working.
In addition to this market mismatch, the land which is perceived to be readily developable, really isn’t. It is constrained by numerous things such as:
- Fragmented land sizes and ownership
- Unrealistic urban densities
- Various excessively restrictive planning overlays
- Lack of affordable and co-ordinated infrastructure provision
- Urban economic inefficiencies
- Long and uncertain approval processes
Some local councils are better than others, whilst other LGAs have their heads in the sand. The recently assembled state government land supply council – based in their first round of reporting – appears to be echoing the status quo.
For mine, the priority should be building homes for local residents not overseas buyers or international tertiary students.
The lack of appropriate new development land is already having a negative impact on local job creation and housing affordability. Unless SEQ increases its land supply and facilitates more wanted urban development, economic growth will go elsewhere.
Timely urban development and infrastructure is the key to facilitating economic growth. You cannot have one without the other.
It’s time to pull your finger out SEQ!