Our June South East Queensland Market Update shows that SEQ’s affordable housing options have become increasingly constrained, as demonstrated by the fact that only 27% of houses sold below $620,000. In particular, Brisbane’s inner ring, which spans from 0-10km from the CBD, presents an even more limited supply of affordable housing options. Merely 3% of transactions in this area correspond to prices below the $620,000 mark, underscoring the scarcity of affordable housing within close proximity to the city.
As a result, the average buyer in SEQ must weigh the options between purchasing a detached house located more than 20km from the CBD or considering ‘non-traditional’ options such as purchasing a townhouse or an apartment closer to the city.
This shift in buyer options highlights the need for a comprehensive approach to address housing affordability challenges. It calls for efforts to increase the supply of affordable housing within desirable locations, as well as the development of well-planned, high-quality medium density housing options that offer heightened proximity to urban centres.
House and land
SEQ has witnessed a notable increase in average build prices; having grown 15% over the past 12 months. Additionally, land prices have also surged, with a 14% increase observed in the same period. These upward trends in construction and land costs have resulted in a significant portion of house and land packages exceeding the $620,000 price point.
For buyers seeking house and land packages within the $620,000 range, the most favourable options are generally found in Brisbane’s West and South regions.
The need for small lot products in Queensland
As land prices continue to grow across South East Queensland, smaller lot housing will become increasingly important for delivering affordable homes in the region. The Queensland market can look down south to Melbourne to garner some intel on how a wider range of product mix adds to the supply mix.
Despite SEQ’s increased square metre rates in recent years, the proportion of small lot product has remained relatively consistent. In the first quarter of 2023 the average square metre rate of settled land lots was $746 per sqm and just 6% of total land sales were under 300sqm or less. This was the same share of small lot sales as seen in the first quarter of 2022 and 2021.
Compare this with Greater Melbourne when land prices were similarly approaching $800/sqm in early 2018. At that time 12% (or nearly double SEQ’s share) of sales were from small lot product. The share has grown since then, and with a current square metre rate of around $1,060/sqm, small lot product accounts for over 21% of Greater Melbourne’ total sales and Townhouses make up a further 6% of total Greenfield sales.
It should be noted that this was assisted through the Victorian Planning Authority’s establishment of a Small Lot Housing Code which eliminates the need for a planning permit on lots less than 300 square metres for homes which meet design standards.
This highlights the importance of Queensland local and state government’s planning for this more affordable product type now, to enable a diverse range of buyers and income levels going forward.
This article references findings from our June South East Queensland Market Update. For the full report, click here.