RPM SEQ Greenfield Market Update May 2024

SEQ

SOUTH EAST QUEENSLAND GREENFIELD MARKET REPORT

MAY 2024

Overview

• Ongoing population growth continues to drive housing demand in Queensland

• Supply is not keeping pace and immediate real world solutions are required to address the imbalance

• Despite strong price growth, greenfield regions remain an attractive option relative to the established market

Queensland’s housing market is facing an unprecedented surge in demand driven by its ongoing population boom. Overseas migration nearly quadrupled its long-term average in the year to September, complemented by strong interstate migration patterns. This rise in demand underscores the continued growth and potential of SEQ’s housing market, but also highlights the immediate need for real world solutions to the supply-demand imbalance.

The South East Queensland Regional Plan (SEQRP) projects the region’s population will grow to approximately 6 million by 2046, requiring the construction of nearly 900,000 new homes. The greenfield sector plays a critical role in addressing this demand, and making avenues for timely approval and prompt delivery of new housing is paramount.

The government has made a commendable move by passing the Housing Availability and Affordability Bill. The bill aims to streamline development applications and reduce red tape, paving the way for the efficient delivery of muchneeded supply.

The current low supply levels are naturally pushing up property prices. Coupled with increasing build costs, the average house and land package now costs $66,334 more than last year. However, even at $802,855, this figure remains below the established median house price, offering potential buyers a more achievable pathway to the Great Australian Dream.

The allure of new greenfield homes persists. We see evidence in the most recent migration data which highlights a notable population shift towards areas such as Logan-Beaudesert, Wide Bay, and Sunshine Coast – reinforcing the sector’s strength and continued potential.

Clinton Trezise

Managing Director

Queensland & New South Wales clinton@rpmgrp.com.au

Peter Neale

Managing Director

As we move forward, a multifaceted approach that encourages collaboration between all levels of government and industry will be essential to addressing the current housing challenges. With effective planning and clear policies in place, the greenfield sector is poised to play a key role in ensuring sustainable growth and meeting the housing needs of SEQ’s growing population. For more information, please visit: www.rpmgrp.com.au

Queensland & New South Wales petern@rpmgrp.com.au

For a detailed market analysis or a bespoke report, email the team at: contactus@rpmgrp.com.au

About RPM

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A data-driven, holistic approach to property

At RPM, we always start with in-depth research and data-driven insights. When we are guided by data, analysis and key findings, we maximise success.

RPM’s Research, Data & Insights division provides in-depth analysis on current local and overseas economic and property market conditions. The team consists of economists, property experts and GIS analysts who provide real-time market intelligence as well as analytical and strategic advice. Our knowledge and expertise are an invaluable resource for RPM’s developer clients, empowering them to make intelligent, informed, and strategic decisions when evaluating residential developments and investment opportunities.

This rich data helps our team and clients to better understand:

Volume of lots sold

Distribution of lots of a particular size

Dollar per sqm rates

Distribution of price points

Stock release levels

Activity levels by market, product & developer

Volume of stock returned to market

Stock level fluctuations

National Lead Indicators

Remains unchanged since November’s 25 basis point rise

Of this, 548,800 were overseas migrants

Edging closer to the target range (2-3%) Down two points from March 2024 and well under the 100 point baseline

Primarily driven by Government and private

Queensland Lead Indicators

Economic Overview

Population Growth

Overseas migration nearly quadruples the long-term average.

Queensland’s population boom has broken its previous record with an increase of 143,600 new residents in the year to September 2023. This significant spike is largely attributed to the 87,954 new overseas migrants – a figure nearly four times the long-term average of 23,624.

Interstate migration also contributed considerably with 32,625 people moving to the sunny state from across Australia. While this figure sits above historical averages, it does signal a trend towards normalisation since the pandemic peaks.

This boom has implications for various aspects of the state –particularly the housing market and infrastructure needs – and is one of the key factors to consider in the current supply-demand imbalance.

Annual Gain Forecast gain by 2046

143,600 2.16m

Housing Finance

Interest rate stability offers the first signs of recovering confidence.

March figures show that investor finance is on a positive trajectory and showing signs of confidence returning to the market. This is likely due to the interest rate stability, paired with the strong market fundamentals forecasted for the state.

Queensland investor loans were up 17% compared to March 2023; recording 4,035 new loans across the state. Of these, investor loans for new land increased 43%, newly erected dwellings 32%, and established dwellings 18%. With vacancy rates at all-time lows, resulting in increasing rents and thus yields, the share of investors, which have historically been at 30% of total new loans has reached 37% which is an equal high (from December 2023).

Although owner occupier loans were down 4% compared to March last year, this remains above pre-pandemic levels.

vs. Owner Occupier Loans - Queensland

Investor Loans (March 2024 vs. March 2023) +17%

Queensland Approvals

Approvals decline despite the state’s housing supply shortfall.

Despite Queensland’s housing supply shortfall, total building approvals declined 16% over the year to March 2024. This trend underscores the challenges within the construction industry –notably the rising costs and feasibility pressures.

Apartments saw the biggest dip with a 39% decrease to only 6,559 approvals across the state. This reflects the impact of high construction costs – meaning most approvals were for luxury boutique developments that operate on bigger budgets and can better manage elevated construction costs.

House approvals were down 9% totaling 20,224 over the year, with the decline being symptomatic of the ongoing affordability concerns and higher building costs. Meanwhile, townhouse approvals saw a more modest increase of 2.7%. The additional 118 units brought the total to only 4,510 despite the Government’s continued focus on delivering the “missing middle” dwelling type by favouring more density (typically townhomes) in infill areas of the region.

The downturn in approvals hinders the steadily deepening supply challenges and reflects the growing issues with building costs, buyers’ ability to gain loans, and market confidence. However, it also presents opportunities for developers and policy makers to reassess strategies that better meet the state’s housing needs.

Building Approvals

Building Costs and Sizes

Elevated construction costs are driving demand for smaller homes.

Construction Costs - Australian Capital Cities

Average Build Size - Queensland (sqm)

Building costs across all capital cities have continued to climb in the year to December 2023. The average rate per square metre for new home construction has increased by 14% to $1,942 in Q4 2023 – surpassing Melbourne’s $1,910 per square metre.

While Brisbane is still more affordable than Sydney’s $2,100 per sqm, the continued cost increases have seen buyers now opting for smaller homes that balance their financial capacity with their desired lifestyle. This is seen in Brisbane’s average build size dropping from its peak of 260sqm during the pandemic to 236sqm in December 2023.

Source: HIA, ABS Unpublished Building Approvals Data

While the rise in building cost is not unique to Brisbane, this change in buyer behaviour towards smaller homes highlights the impact of the current affordability challenges.

With further NCC (National Construction Code) changes coming into effect on 1 May 2024, pricing pressure is expected to continue. Anecdotally, our major builder partners suggest these changes will add around $10,000-$20,000 to the build cost of a new home.

Source: HIA, ABS Unpublished Building Approvals Data

Queensland Residential Property Market

House and land prices rise but remain below the established median house price.

Greater Brisbane property prices have seen substantial growth across all major dwelling types over the year to March 2024. The median house price rose by 7%, reaching $824,000 – a notable increase that reflects the demand for detached houses in the region. However, this growth was overshadowed by even higher increases in unit and land prices, both of which surged by 13%. This led to a median unit price of $555,000 and a median land price of $359,000.

These significant rises highlight the sharp supplydemand imbalance in Brisbane’s property market, driven by low levels of housing supply and record population growth. The high demand for housing is putting upward pressure on prices, adding further challenges for buyers already faced with high cost of living expenses.

In addition to rising property prices, the average build price in Greater Brisbane increased by 6% over the year to March 2024 to $443,855. When combined with the median land price of $359,000, the average house and land package now costs $802,855 – a $66,334 increase over the year.

Despite this notable rise in house and land prices, it remains below the established median house price – providing an opportunity for those looking to enter the market at a more achievable price point.

Greater Brisbane Median House Price

Source: Pricefinder

Greater Brisbane Median Unit Price

$824,000

Greater Brisbane Includes: Brisbane, Ipswich, Moreton Bay, Logan, Redland, Somerset, Lockyer Valley and parts of Toowoomba and Scenic Rim. + 7% Over the year to March 2024 + 13% Over the year to March 2024 + 13% Over the year to March 2024

Greater Brisbane Median Lot Price

$555,000

$359,000

Greater Brisbane Property Prices

Greater Brisbane Land

Greater Brisbane House and Land Pricing Property Prices

Source: Pricefinder, ABS

Greenfield Market Update

Greenfield Market Overview

SEQ’s median lot price for settled sales saw a 26% increase over the year.

In the March Quarter of 2024, SEQ’s median lot price for settled sales reached $405,000, marking a robust 26% increase over the year. The rise in median lot price is complemented by an 11% increase in the median lot size to 467sqm. As these figures are based on settled data, it indicates a higher volume of larger, soon-to-be titled stock which transacted and settled within the quarter.

The regional variations in land prices offer a more nuanced view. Sunshine Coast LGA saw the largest growth in land prices for Q1 2024 with a 30% increase to $500,000. This was largely due to a significant gain in land size which saw the median reach 708sqm. Logan LGA followed with an 18% gain, bringing its median lot price to $355,000. Ipswich also saw significant growth, with a 14% rise to $335,500.

In contrast, Lockyer Valley saw the largest drop in land prices, although this decline is skewed due to low sales volume in the region. Rapid land price growth has prompted many buyers to shift their preference from larger lifestyle lots to smaller ones to maintain affordability. Ten years ago, lots sized under 448sqm accounted for 32% of all sales, but over the past year, this figure has doubled to 64%. Meanwhile, the market share of larger lots (512sqm or more) has more than halved, decreasing from 53% in 2014 to just 23% in 2024.

Sub 300sqm have remained consistently at around a 10% share of sales over the past five years. This is likely due to restrictive planning regulations and elevated construction costs, particularly when smaller lots can necessitate the construction of more expensive double-storey homes.

Source: Pricefinder and RPM Research, Data & Insights

Note: Includes expanded area of Queensland identified in the table on the following page.

Median Land Prices by LGA

Source: Pricefinder Settled Sales <2500sqm to March 2024. Extracted May 2nd 2024.

Note: Tables capture settled land sales by sale date. Fluctuations can occur in recent quarters due to lower volumes of registered lots.

Median Land Sizes by LGA

Source: Pricefinder Settled Sales <2500sqm to March 2024. Extracted May 2nd 2024.

Note: Tables capture settled land sales by sale date. Fluctuations can occur in recent quarters due to lower volumes of registered lots.

Land Sales (Settled)

Source: Pricefinder Settled Sales <2500sqm to March 2024. Extracted May 2nd 2024. Note: Tables capture settled land sales by sale date. Fluctuations can occur in recent quarters due to lower volumes of registered lots.

SEQ Lot Sizes

SEQ Lot Sizing Over Time

Source: Pricefinder, RPM Research, Data & Insights

Source: Pricefinder, RPM Research, Data & Insights

How Affordability Drives Migration

Top Regional Areas for Net Migration Year to June 2023

The Australian Bureau of Statistics’ (ABS) recent migration data highlights a notable population shift to Queensland’s greenfield sector – claiming five of the top ten highest gains by region across the nation. The migration patterns show that Greenfield regions accommodate a high share of population growth and that there is a clear shift from the higher priced metropolitan areas to the more affordable growth areas.

This region had the highest net internal migration in Australia, attracting 6,340 new residents in FY23. It is the largest area of greenfield land supply in SEQ. Most of its new residents (37%) migrated from the neighbouring and more expensive Gold Coast SA4 region.

Ranking second nationally, Wide Bay (including Gympie, Fraser Coast, and Bundaberg) welcomed 5,408 new residents in the year. The majority (21%) moved from the adjacent, higher-priced Sunshine Coast.

Fourth in net migration gains nationally, the Sunshine Coast attracted many residents from Moreton Bay South and Sydney’s Northern Beaches. Additionally, the region saw a net inflow from Melbourne’s inner South, demonstrating the Sunshine Coast’s ongoing appeal as an affordable coastal destination for those leaving the southern capitals.

Melbourne to Brisbane Interstate Migration

Historically, Brisbane house prices have averaged around 77% of Melbourne house prices. The following chart shows a notable correlation of increased migration to Queensland following a period of relative value gap between the two capital cities’ property prices.

The lag between property value gaps and migration trends can be attributed to the time it takes to move interstate. From March 2023, Melbourne house prices fell below its 77% average and in June 2023, Brisbane houses were overvalued (compared to Melbourne) by $39,000.

Sydney to Brisbane Interstate Migration

This relationship between affordability and interstate migration is more pronounced when we look at Sydney and Brisbane.

Historically, Brisbane house prices have averaged around 58% of Sydney’s prices. As with Melbourne, we notice a lag between the value gap and significant migration changes, but the connection between these two factors remains clear.

We should also acknowledge that Covid-19 accelerated migration from Victoria and New South Wales to Queensland. A major driver to this notable exodus was the lifestyle shift prompted by restrictive lockdowns. The rapid uptake of working from home arrangements also empowered people to buy more affordable homes in Queensland.

Lot Registrations Remain Low

The latest Queensland Treasury figures show that 18,783 new dwelling lots were registered in SEQ during the year to March 2024. Although this is slightly higher than last year, it remains significantly lower than the region’s historic average of 22,376 lots. It is also significantly lower than the 34,552 new dwellings required each year under the SEQRP.

Lot Registrations

SEQ Regional Plan 2023, QLD Treasury

Can Dwelling Production Keep Up?

Under the SEQ Regional Plan, an average of 34,552 dwellings are required each year between 2021 and 2046. Source: Draft SEQ

Government Initiatives to Address Supply

All levels of government are feeling the pressure as the steadily increasing demand is pushing more homes out of buyers’ budgets – rendering the current supply-demand imbalance a key social and political issue.

Recently, we have noted the announcement of several policy changes, updates, and funding initiatives designed to unlock new housing and its surrounding infrastructure. On a Federal level, these include the National Housing Accord, National Planning Reform Blueprint, and the National Housing and Homeless Plan, as well as around $16 billion in targeted funding. The State Government offers the SEQRP, the Housing Availability and Affordability Bill, and funding initiatives including the Catalyst Infrastructure Fund, the Housing Investment Fund, and the Growth Acceleration Fund.

These and other policies (or amendments) take a firmer approach to unlocking more housing, prioritising infrastructure, and streamlining planning processes. Although they are neither quick nor perfect solutions, they are certainly a step in the right direction.

While we support any changes that facilitate greater and faster supply, a monumental uplift is promptly required. We must consider the timing between measures being enacted and their real-world impacts; we must also consider what can be done to increase affordable supply in the interim.

Greenfield land supply will continue to play a significant role in the supply and affordability equation – particularly considering the elevated build costs hampering feasible delivery of higher density supply in infill areas. Continuing to focus on ways to unlock greenfield supply could pay greater dividends in the shorter term.

Government Initiatives Summary

• This Accord applies to all levels of government and private development participants. It aims to build 1.2 million new, well-located homes over five years from mid-2024.

National Planning reform blueprint

• This blueprint aligns housing targets across governments, promotes higher density dwellings where suited, and streamlines approval pathways.

National Housing and Homelessness Plan

• A 10-year strategy to inform future housing and homelessness policies in Australia.

•

• It aims to support 20,000 new

New Homes Bonus - $3 billion

dwellings and 10,000 new affordable dwellings.

• A $3 billion incentive for states and territories that exceed their share of the 1 million well-located homes.

Housing Support Program - $500 million

• A funding program to kick start housing supply in well-located areas.

• This includes initiatives including essential services and amenities to support new housing development or planning capability.

National Housing Infrastructure Facility - $575 million

• Funding aimed at attracting institutional capital to the social and affordable housing sector.

• The NHIF will also receive federal funding to support more social housing.

Social Housing Accelerator - $2 billion

• Funding to be paid to states and territories to deliver 4,000 new and refurbished social homes across Australia.

Government Initiatives Summary

• Provides the planning framework and designated land use to accommodate the targeted 900,000 new dwellings by 2046.

Housing Availability and Affordability Bill 2023

• Aims to improve Queensland’s planning framework by facilitating new housing delivery, streamlining assessment processes, and reducing regulatory burdens for state and local governments.

• Grants the Planning Minister authority to acquire land for an easement or infrastructure.

Economic Development and Other Legislation Amendment Bill 2024

• Aims to expedite housing delivery by Economic Development Queensland (EDQ), focusing on housing supply, affordability, and diversity.

• It introduces a Place Renewal Framework, refines EDQ’s structure and operations, and ensures financial sustainability through transparent allocation of resources and proposed regulatory fee changes.

Ministerial Infrastructure Designations Nov 2023

• Expedites approval of essential community infrastructure such as hospitals, schools, power, and water infrastructure to the planning minister.

• Housing

(HIF)

• QuickStarts QLD is a capital investment program to accelerate construction, redevelopment, and purchase expenditure to deliver new homes sooner.

• Help to Home partners with property owners, landlords and registered community housing providers to deliver housing outcomes to people in need.

Infill Fund - $350 Million

• Fund to incentivise infill developments.

Growth Acceleration Fund - $50 Million

• Supports the delivery of infrastructure to unlock housing.

Catalyst Infrastructure Fund - $150 Million

• Funding for essential infrastructure delivery in Priority Development Areas (PDA).

Growth Area Compact (as part of the SEQ City Deal) - $210 Million

• Funding for Caboolture West.

• Includes a $100 million loan.

Greenfield Market Outlook

SEQ stands as a region with the potential to provide the affordable land supply needed.

SEQ’s current housing and affordability challenges, driven by rising demand and limited supply, remains a complex issue. A sustainable solution requires concerted efforts from all levels of government and industry. While the recent Housing and Affordability Bill aims to expedite and boost housing supply, the path towards better balancing supply with demand remains long.

One key challenge is that dwelling production rates are not keeping pace with the state’s booming population, resulting in upward pressure on housing prices and exacerbating affordability concerns.

This ongoing trend highlights the need for more proactive and efficient measures that will accelerate an increase of housing stock.

SEQ stands as a region with the potential to provide the affordable land supply needed. However, for affordability to remain achievable, timely and impactful government initiatives must be implemented to increase the pace of housing development. Without swift action, there is a risk that the current challenges will deepen further.

Despite these challenges, there are still significant opportunities for developers to contribute to housing supply in a high-demand market, including the delivery of diverse dwelling types that cater to a range of buyers.

Continued focus on efficient development practices and working in tandem with government initiatives will allow the industry to play a pivotal role in shaping the future of the SEQ residential market.

It’s important to remember that the great Australian dream of homeownership remains, and it remains strong. The pathway to keep new dwellings affordable and attainable may be complex but is certainly achievable. RPM will continue to support the timely release of greenfield land and approvals to reach this goal.

Clinton Trezise

Managing Director

Queensland & New South Wales clinton@rpmgrp.com.au

Peter Neale

Managing Director

Queensland & New South Wales petern@rpmgrp.com.au

Trusted Expertise for Development Site Sales

Strategic advisory services are key to maximising land value

Our advisory approach enables us to identify opportunities early in the process, mitigate risks, and create value for our clients in alignment with their unique objectives.

Unlocking the value of development land requires more than a simple transaction. RPM Group’s Transactions & Advisory (T&A) division offers strategic advisory services for experienced developers and private landowners – empowering both parties to tap into the true potential of development land across the east coast of Australia.

Our T&A team’s advantage lies in its ability to leverage RPM Group’s in-house research capabilities, proprietary mapping data, and deep industry knowledge of local areas.

Referencing SEQ’s dynamic land market, Tim Hyland, National Strategy Manager of Transactions & Advisory, articulates the critical need for researchbacked, strategic advisory services for both parties. “Whether we’re speaking to landowners or developers, we know that investing in land requires careful consideration and strategic planning,” he notes.

“Our advisory approach enables us to identify opportunities early in the process, mitigate risks, and create value for our clients in alignment with their unique objectives.”

“Navigating the complexities of land acquisition requires expert guidance,” Tim adds, referring to his dedicated team specialising in development land transactions and the wealth of experience that comes with analysing over 10,000 sites in the SEQ region alone. This profound understanding of the SEQ landscape (alongside NSW and VIC) includes each region’s unique policies and regulatory frameworks. This informs the team’s recommendations that are aimed at maximising opportunities while actively minimising risks.

At the core of T&A’s advisory process lies RPM’s proprietary GIS mapping capability – a sophisticated database that allows for precise

analysis of land parcels. This proprietary information takes multiple factors into consideration to paint a detailed picture of a property’s potential; enabling the division to effectively assess risks and opportunities.

“Our advisory services encompass thorough due diligence processes aimed at mitigating risks associated with land purchases,” Tim explains. “ De-risking the purchase process means developers can navigate potential challenges with confidence.”

The T&A division also offers personalised strategies and expert guidance to private landowners seeking to maximise the value of their holdings. “We understand this can be a big decision, particularly if this land has been held by families for generations,” he notes. Through collaborative consultations and comprehensive assessments, the division equips

landowners with the knowledge and tools for making informed decisions that align with their goals.

“Understanding the nuances of your landholding is essential to tapping into its true value; our advisory services are designed to empower landowners and developers with the insights they need to unlock hidden opportunities.”

Contact the team for more information about our strategic Transactions & Advisory services: tim@rpmgrp.com.au

Tim Hyland National Strategy Manager

RPM’s SEQ Team

Sales and Marketing

Clinton Trezise

Managing Director

Queensland & New South Wales clinton@rpmgrp.com.au

Research, Data & Insights

Michael Staedler

General Manager

Research, Data & Insights m.steadler@rpmgrp.com.au

Transactions & Advisory

Tim Hyland

National Strategy Manager

Transactions & Advisory tim@rpmgrp.com.au

Peter Neale

Managing Director

Queensland & New South Wales petern@rpmgrp.com.au

Jasmin McDougal

Project Marketing Coordinator jasmin@rpmgrp.com.au

Andrew Raponi

Research Manager a.raponi@rpmgrp.com.au

Simon Brinkman

Senior Research Analyst simon@rpmgrp.com.au

Unlocking Australia’s Property Landscape

For detailed insights or custom reporting, contact the team at: contactus@rpmgrp.com.au

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