Finding tomorrow’s hot property, TODAY

There are multiple reasons why Australia has a housing shortage and why the numbers of new dwellings needed are simply not being built.

This is something I have spoken about regularly in the past and will continue to do so, as it’s the core issue creating problems for real estate consumers of all kinds – home buyers, investor buyers and tenants.

Here are the latest events and announcements which help to explain why we have a housing shortage with rising prices and rising rents, problems which are not going to be fixed in the foreseeable future …

ITEM 1 – BUREAUCATIC DELAYS: Sydney councils are sitting on backlog of almost 8,500 unresolved development applications and requests for development certificates, according to NSW government data.

There are over 5,000 unresolved development applications across the Greater Sydney area, plus 3,300 active “complying development certificates”.

Five councils each have more than 300 local development applications that are waiting to be finalised. Data from the Department of Planning Housing and Infrastructure lists the Inner West Council as the worst offender, with 456 “active” DAs waiting for a determination.

The Northern Beaches, Hills Shire and Cumberland Councils also have major backlogs.

Thousands more “complying development certificates” are also adding to the backlog, despite being designed to give faster approvals to developments that meet certain requirements.

Some councils are taking more than a year to approve homes. And some developers are waiting up to a decade for projects to be approved.

In my view, one of the core issues is that many councils have a NIMBY attitude to development, especially high-density residential. They simply don’t want developments to be built and do everything they can to frustrate builders.

ITEM 2 – NOT FINANCIALLY VIABLE: In Perth, the rate of apartment completions has dropped to its lowest levels since records began in the 1980s.

A new Property Council report says that, to meet the housing targets set by the National Housing Accord, WA would need to be delivering five times the number of apartments per year that it currently is.

The Sky High report says there are more than 10,000 apartments approved for WA but effectively on hold and unable to be constructed.

The major issue is that projects are just not financially viable – because the cost of delivering an apartment is generally higher than the market is willing to pay, so projects simply don’t stack up. Only luxury apartments are economically viable projects.

The report blames climbing construction costs – driven by labour shortages and competition for labour from government and mining sectors.

The report says: “Developers are reporting that construction cost estimates are now almost double the cost of similar developments five years ago.” 

The Property Council expects that costs will climb even higher as the new national construction code and bargaining agreements imposed by government take effect.

This is problem not only in Perth but right across Australia. Developers are scrapping unit projects because the costs are so high, making them financially unviable.

The Australian Construction Industry Forum says it’s a worrying trend for a country that needs more, denser homes – not only apartment towers but medium-rise and townhouse developments in existing suburbs – to tackle the chronic undersupply of housing and to ensure longer-term affordability.

The forum’s Construction Forecasting Council chair and chief economist Nerida Conisbee says: “It’s very, very expensive to build apartments. Many projects aren’t going ahead.”

ITEM 3 – WORKER SHORTAGES: A recent report reveals that Australia needs 130,000 additional workers to combat labour shortages in the construction sector. This has prompted calls for rapid reforms from both federal and state governments to attract and retain skilled labour.

The report says the nation is on track, in 2024, for the worst year in new home builds in over a decade, with an 9 per cent decline in new building starts, totalling just 158,000 when it needs to be 240,000 per year to meet the Federal Government’s fanciful target of 1.2 million new homes in five years.

Construction starts for detached houses have dropped by 10 per cent, while higher-density projects have declined by 6 per cent. If this pace continues, Australia could see fewer than 800,000 new home starts over the five years, leading to a shortfall of over 400,000 homes compared to the National Housing Accord target.

The decline in apprenticeship numbers further compounds this crisis, with completions down 8 per cent and commencements down 12 per cent in the past year. 

ITEM 4 – POLITICAL POLICIES: The Housing Industry Association says a home building recovery is possible because buyer demand is rising, but state government housing policies risk stalling the revival.

HIA Senior Economist, Matt King, says demand for new homes nationally is accelerating – largely due to high population growth, low unemployment, stable incomes and the absence of interest rate rises for the past year.

King says activity generally is picking up, but there are big differences across capital city and regional markets. Sydney remains an outlier and there is still no indication of a near-term rebound in residential building in the big city.

King says: “New home building in the Sydney basin remains exceptionally low, primarily due to high land prices and excessive housing taxes and infrastructure charges.”

Australia-wide, the HIA says the detached home building sector looks promising, but the unit sector remains constrained and is unlikely to experience recovery before mid-2025. 

King says: “The sector continues to be dampened by skilled labour shortages, business credit constraints and the aftermath of significant building material cost escalation. 

“The extent of the recovery in new home building will be determined by the ability of governments to ease the barriers to home building.

“Recent state government plans to increased surcharges on foreign investors and introduce taxes on short-term rental accommodation are unhelpful at a time when stability is needed to achieve the target of 1.2 million homes.”

King says the rate of home building is being slowed down by government failure to implement policies such as expedited land releases, concessions on property taxation, and accelerated development approval time frames.

ITEM 5 – HIGH LAND COSTS:  The rapidly prising cost of home sites is one of the biggest barriers to easing the housing shortage.

New figures for South East Queensland indicate that the cost of residential home sites has jumped by as much as $120,000 in a year – up 21 per cent in one LGA where it now costs as much for a block of land as the median home did just two years ago.

This is the City of Brisbane LGA where land prices rose 8.7 per cent in the September quarter alone, pushing the median price of a block of land to $685,000 – which is $3,000 more than what an established home cost in this area in June 2022.

The second biggest annual surge in land prices occurred in the City of Ipswich where the median block rose 15 er cent or by $48,000 to hit $360,000, with the third fastest pace set by Moreton Bay, where prices rose by 10 percent to $415,000.

The cheapest blocks of land in South East Queensland are in Logan City in Brisbane’s south, where a third of SEQ land sales are now occurring – with the median price at $350,000 after a rise of almost 10 percent across the year. 

The Gold Coast had the second highest SEQ land price at $619,000, after an 8 percent rise in the past year.

So, you can imagine what a new house on a block of land costs, when the land alone costs well over $600,000 – as it does in the City of Brisbane and on the Gold Coast.

Why does it cost so much? Primarily because of bureaucratic delays, governments taxes fees and charges, and high interest rates – all problems created by our elected representatives

breaking-news
Find out how much your home is worth in today’s market. Get an instant market update, obligation-free. Gain insight into what your property is valued at, find out its potential rental yield and more.

Brisbane, Gold Coast, Sunshine Coast, Melbourne

Not all investment property tax depreciation schedules are built the same. They should be but the reality is, like many things in the property world, all is not as it seems. The devil is in the details—and the details are everywhere. But relax, at Washington Brown we take care of every last one.

Established in 1978, Washington Brown is one of Australia’s oldest and most respected quantity surveying organisations.

Each year, we prepare more than 13,500 reports, delivering $1.5 billion in depreciation savings.

At Triple Zero Property, we believe in delivering a seamless experience tailored to your needs. From personalised consultations and thorough research to ensuring transparent fixed-price building contracts and competitive pricing, we are committed to excellence at every stage. Our dedicated team oversees every aspect of your property build, from initial planning and throughout the construction process.

Discover how our comprehensive approach and commitment to client satisfaction sets us apart in in creating wealth through property in Australia.

Established in 2005, Reventon has built on a strong foundation in property investment and progressively expanded the business over the years. Today, they offer a complete range of property and financial services that includes, financial planning, accounting, mortgage broking, buyers advocacy and property management.

Reventon is a fully-integrated holistic wealth and financial planning provider founded by serial entrepreneur, international speaker, wealth specialist and company CEO Chris Christofi.

With Reventon, clients benefit from having all their needs met through a single relationship with a dedicated, experienced and trusted team. Our seamless service offers more convenience, greater control and ultimately a better client experience with better financial outcomes.

The propertybuyer team has been in business over 23 years and purchased over 4000 properties. Propertybuyer is a totally independent “Buyers’ Agency” focused on searching, negotiating and buying property in Australia for home buyers and investors. Our goal for each client is the “right property, at the right price, every time”.

We help you:

• Create a clear strategy and realistic “buyers brief”
• Provide access to “off market listings” – properties that are not advertised
• Provide research on the best suburbs with good prospects for capital growth and yield
• Save time – Typically we find the ideal property within 30 to 60 days of engagement
• Negotiate the lowest possible price (ie protect your clients from paying too much!)
• Give accurate appraisals and excellent local knowledge, Propertybuyer is currently the most awarded Buyers’ Agency in Australia, with 37 Awards for Excellence.

We never sell property so we are truly independent – we are not paid by selling agents or developers, so we never have a conflict of interest. This means we can devote ourselves wholly to looking after your best interests.

Plenitude Wealth is a holistic wealth management firm that is dedicated to making a positive change to the financial landscape of Australia and ultimately the world through creating an educational foundation of social awareness, enterprise and social consciousness.

We are passionate about all things property! This passion is about so much more than just property investments, numbers, and spreadsheets, it is about the relationships and genuine care we build with our clients.

We are exceptionally privileged when we are asked to assist our clients to help grow their investment property portfolios or even kick start their first purchase. Unlike most Buyers Agents, we are selective about our clients and do not try and do as many sales as possible – the emphasis is always on quality over quantity!

Our goal is not only to find the ultimate solution for them but to do so in a manner that ensures continued success by choosing locations primed for capital growth and the right cash flow for our client’s goals.

Optalife Wealth works with you to build financial security by providing clarity and confidence about your future. We work with you to build your financial plan, clearly defining what your future looks like and laying out clear and understandable steps for you to achieve.

There is no one size fits all here. We design your plan like a financial roadmap, tailored to your specific situation and what living your optimal life means to you. Like anything in life, having a clear plan increases the likelihood success and having a whole team working alongside you makes reaching your dreams one step closer.

Financebetter is here to guide you through the complexities of the financial world. Our experienced team of experts, including accountants, financial advisors, and investment analysts, is dedicated to delivering exceptional service and results.

Our comprehensive solutions and personalized guidance empower you to achieve your financial goals. Partner with us and experience the Financebetter advantage on your journey to success.

Bond Conveyancing is a licensed Law Firm designed to remove the stress out of buying or selling property in a simple, secure and affordable way. Bond Conveyancing is technology enabled but always people first.

Bond Conveyancing consists of an experienced team of conveyancers and lawyers qualified and skilled in property settlements and transfers. But they are not just about the property. Bond Conveyancing is people first, always. We understand that this is a big moment in your life and our timeliness and effectiveness in communicating with you comes second only to our diligence in ensuring your property settlement goes as smoothly as possible.

Our service puts a fully licenced Buyer’s Agent and Qualified Property Investment Adviser right at your side, to ensure that your interests are being protected at all times and your next investment property purchase achieves maximum success. Leverage off our extensive experience, professional know-how, and independent research to ensure that you’re accessing the best property opportunities available Australia-wide.Buying Properties in Sydney / Melbourne / Brisbane / Adelaide we operate on a client first approach, and will never sell you any property. We are 100% fee for service, providing independent & unbiased advice from qualified advisers and Buyer’s Agents. We set the standard in providing exclusive, one-on-one, independent, trusted and expert advice, tailored individually to suit your particular needs.

Subscribe to our newsletter today and receive a FREE copy of How To Identify Hotspots