The influx of people moving to Queensland from overseas and interstate has put the housing market under extreme pressure, with an expert calling for more land to be released to help ease the crisis.
RPM’s Queensland Managing Director, Peter Neale, said record overseas and interstate migration had put the current housing supply at critical levels and there needed to be more affordable options to meet the demands of new arrivals.
“This shortage has been compounded by record interstate migration to Queensland last year that drove the largest population growth of any Australian state in 2022, and it will become even more critical with the expected spike in international migrants over the short term,” Mr Neale said.
“Market forces at the moment are colliding simultaneously to exacerbate the critical housing shortage in South-East Queensland, which is further fuelled by a continuation of poor economic factors.
“ABS Census data shows that the average rental property household size is declining, which means that even more dwellings are required to house the same number of people today than in the past.”
Mr Neale said that despite housing construction reaching record levels over the past year, housing approvals in Queensland fell 15.4 per cent over the 12 months to April 2023.
He said buyers need to be offered more affordable options and that’s not currently available in South East Queensland.
“Buyers will become more confident once rate increases subside, in the meantime, there needs to be a concerted effort by governments and councils in South-East Queensland to cut red tape and get approvals through faster,” he said.
“This is a critical enabler.”
According to Mr Neale, providing buyers with options like smaller blocks for townhouses and terrace homes would help.
It would also encourage more investors into the market to deliver much needed rental stock to South-East Queensland.
The report found that buyers with an annual household income of $120,000 could only borrow $620,444 in May this year compared to $898,620 in April last year due to interest rate rises.
Mr Neale said developers needed to carefully consider their product mix – taking wider issues such as affordability into the equation.
He said that the average buyer was finding it harder to get into the market due to the significant drop in their borrowing capacity, meaning they will require smaller homes, land lots, or to move further out to rural areas.
According to Mr Neale providing more options is something that has worked in other states.
“We witnessed this in Melbourne with the Small Lot Housing Code,” he said.
“Removing the red tape around small lot products initiated greater builder and developer acceptance – this saw demand pick up significantly.
“The slow release of land in the region is constraining supply and deepening the problem, and the situation has become even more critical now because many apartment developers are shelving their projects because of high construction costs and unfavourable economic factors.
“It is not only the greenfield market that requires support, the inner and middle ring through tackling planning hurdles and incentivising developers to re-enter the market also requires stimulus.”
Although Queensland’s residential vacancy rate improved marginally last month, it remains extremely tight at 0.9 per cent.
Mr Neale said the crisis had been compounded by a continuing decline in rental stock and record-low housing approvals across the state over the past 12 months.
“We estimate the state is 25,000 rental properties short of a healthy rental market; this will become even more pronounced as overseas migration increases throughout the year,” he said.
“While we acknowledge the government’s intervention, there is still considerable work to do in order to address the challenges as there is a need for a more concerted effort if we are to address the deepening housing deficit in the South-East Queensland market.”
