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SOUTH EAST QUEENSLAND RESIDENTIAL MARKET SHOWING STRENGTH DESPITE HEADWINDS With interest rate rises of 4 per cent since
May 2022, with the cash rate now 4.1 per cent, and significant increases in construction costs, the South East Queensland (SEQ) residential market has shown resilience despite these challenges. This resilience stems from continued underlying demand from local and interstate purchasers and a limited supply of existing and new housing stock for the growing population.
Troy Linnane Director Residential
Development Sites Colliers Queensland
Due to these factors, build-to-rent (BTR) is gaining significant traction; up to 4,000 BTR units are in application or approved phases, 1,800 are under construction, and up to 2,000 are completed across SEQ. Institutional capital, both domestic and off-shore, is looking to invest in this emerging asset class. While not the solution to the current housing crisis, it will assist, and it is expected this sector will continue to grow in Australia due to continued population growth, housing affordability constraints and lifestyle preferences. This BTR demand is propelled further by the increasing under 35’s population who prefer to rent. The Colliers Queensland Development Site team have collectively transacted up to $750 million in development site sales in the last 12 months and has multiple active campaigns in South East Qld, including Ripley Town Centre. SEQ will further benefit from the continued momentum and build-up towards the Brisbane 2032 Olympic and Paralympic Games, with Federal and State Government investment in new infrastructure such as stadiums and public transport. There is still plenty of capital looking at development opportunities, and discerning purchasers are now looking beyond the current fundamentals and planning to leverage from the likely capital growth achieved when interest rates and construction costs stabilise, and consumer confidence improves.
Housing stock continues to sell at a faster pace in 2023 compared to previous years, with Brisbane dwelling prices increasing by 3 per cent in the last quarter due to this demand. An example of this is the number of apartment sales for ‘Monarch’, at Toowong, launched in March, which is now two-thirds sold, with 140 apartments sold mostly to local owner-occupiers. The housing crisis in SEQ is significant, with a current vacancy rate of 0.9 per cent, and it’s worth noting that 3 per cent is market equilibrium. Accordingly, rental growth has grown considerably, with an increase of 17 per cent in the 12 months to June 2023. Population growth in Queensland is outperforming other states, with an increase of about 110,000 new residents over the 12 months to September 2022, with most of this growth stemming from interstate migration from New South Wales and Victoria. South East Queensland is forecast to grow by 2.2 million people and be home to circa 6 million by 2046, requiring around 900,000 new dwellings. Additionally, the Federal Government recently announced an increase in international migration into Australia over the next two years of up to 700,000 people, of which at least 100,000 new residents are expected for Queensland. While this initiative is to help alleviate skilled labour shortages across the industry, including the construction sector, this will, in turn, add further pressure to an already undersupplied housing market.
14 – August / September 2023
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