Land release lags demand for new home builds

Land in popular east coast development areas is not being released fast enough to keep up with demand, with increased unit development being called on to fill the gaps.

Land in popular east coast development areas is not being released fast enough to keep up with demand, with increased unit development being called on to fill the gaps.

The latest report from RPM on the southeast Queensland market found the region is significantly behind targets to deliver enough homes for the estimated two million additional people set to live there by 2046.

About 34,500 homes need to be built each year to hit a target of 863,000 new homes. But the state’s historical average sits around 22,778 houses, with about 40 per cent units.

RPM’s Queensland managing director Clinton Trezise says a focus must be put on building “up, not out” and increasing the share of units to 52 per cent of construction to reach the goal. However, he acknowledged the trouble of balancing affordability.

“Land is not getting developed fast enough by the current SEQ Regional Plan with complex approval processes, land constraints and lack of needed infrastructure meaning seemingly developable land cannot be unlocked to facilitate supply or simply supply cannot be developed fast enough,” he said.

“The reality is that adequate, affordable supply is not going to come from apartments because of the cost constraints to build and affordability to buy are impacting the sector.”

Social and affordable housing development at Chigwell. Picture: Chris Kidd

It is a challenge not only being faced in this region. A recent report by PEXA found the total number of vacant land settlements in NSW, Victoria and Queensland fell 13.6 per cent to 73,901 homes in the 2022/2023 financial year compared to the period prior. The statistic when combined with lengthy settlement times of up to a year in Victoria is leading to fewer homes being built.

PEXA’s head researcher Mike Gill said population is a leading factor fuelling the need for more homes.

“A lot of what we are seeing is in response to a softening market,” he said.

“But we’re also seeing some pressures on the supply side. Not enough land is being released to cater for the demand of a greater population. It’s most apparent in NSW.”

Property Council of Australia chief executive Mike Zorbas said one of the most significant challenges developers have to contend with is the big infrastructure build spent by governments, which is making it harder to secure a builder.

“As a nation, we're about to sleepwalk into a deficit of people who are going to build the homes,” he said.

“What we really need to give some attention to in the next 12 months as a country is how do we grow that percentage of the pie of skilled migration who are people that are going to help build homes, construct the civil engineering that links up new suburbs, roads, that are quite fundamental to getting to a million new homes by 2029.”