Could small lots and faster approvals solve the housing crisis? (AAP Image/Glenn Hunt)
Smaller lots for new builds, faster delivery, and reducing the loan serviceability buffer could be the answer to South East Queensland’s housing crisis, property development experts say.
Oliver Hume Property NT and Qld general manager, Dan Ross said more measures were needed to help first homebuyers into new homes to ease the strain on the SEQ property market.
Mr Ross said the increased cost of new builds and limited supply were pushing up house and land prices and preventing first time buyers from getting on the property ladder.
“There’s no doubt, the limited availability of new product, which is usually where first homebuyers operate, has led them to go into the established market, competing with upgrade buyers,” he said.
“Introducing smaller lot products with reasonable price per square metreage will allow first homebuyers to still access the first homeowner grant.”
Mr Ross said ideally, there needed to be a greater mix of the smaller lot sizes already approved by the planning scheme in new developments.
He said this meant local councils and developers coming together and finding the balance the allow smaller, more affordable lots ideal for first homebuyers.
“What could assist the process is if council change infrastructure charges on smaller lots,” he said.
“A freehold lot on 280 sqm has the same infrastructure changes as a 420 sqm block.
“The percentage on total value is much higher on the smaller lot and it’s a challenge for developers to price it for that entry level market.
“In other states they do infrastructure charges per hectare rather than lot, so that could be applied on higher density product in Queensland to help reduce price.”
Oliver Hume Property NT and Qld general manager, Dan Ross. Image supplied.
Mr Ross said first homebuyers in SEQ were well educated and proactive, but struggled to find new homes within their budgets.
“From the coal face feedback from the sales team, I don’t think first homebuyers expectations are out of check,” he said.
“They are balancing borrowing capacity with what they can get from the bank and aligning it with what they can get in the market.
“They explore all their options, but time isn’t on their side and availability is limited.
“While they’re trying to do their research and act quickly, the build coast may move again.”
Property Council data showed Queensland was 33.4 per cent below the quarterly dwelling completion target in the September 2024 quarter, with the state 4110 properties short of the 12,287 target.
Mr Ross said Oliver Hume’s development clients were working on introducing more narrow and shallow depth lots to service the first homebuyer market, but speed of delivery remained an issue.
“All of our vendors are very aware of it and we speak about it weekly,” he said.
“Councils want a good outcome for their community and their mindful of people speeding through the approvals phase too quickly, but buyers require contracts to be signed by certain dates.
“We need councils to expedite approvals on small lot products. Developers are keen and builders are willing to bring this product to the market.”
Oliver Hume Property group CEO, Julian Coppini.
Oliver Hume Property group CEO, Julian Coppini said the first homebuyer new build buying pool was a very limited market.
“In terms of that demographic it’s really the sub-$550,000 to $600,000 price bracket,” he said.
“Every release they let go by, prices go up and it hurts their deposit even more.”
“It’s not just land price going up, build price has gone up, and with land price up and build cost up, borrowing capacity is down.”
Mr Coppini said lowering the serviceability buffer for first home buyers would have a significant and positive impact on the affordability of new homes.
“A serviceability buffer of 3 per cent was set as an emergency measure when interest rates were close to zero but that has no correlation to current interest rates,” he said.
“It is only serving to lock young buyers out of the market as prices rise.”
“As interest rates have risen the buffer has risen, making it significantly harder for first home buyers to get a loan and it is no longer fit for purpose.”
Mr Coppini said even with interest rates dropping a full 1.00 per cent over the next 12 months, most buyers would remain priced out of buying an average house and land package of approximately $750,000.
“Households on an income of $120,000 will still only create a borrowing capacity of approximately $650,000 if the variable lending mortgage rates falls from 6.6 per cent today to 5.6 per cent,” he said.
“Without deeper cuts to interest rates or a major overhaul of serviceability buffers the affordability crisis will roll on.”
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