Global building materials shortages, Government incentives and jump in SE Qld interstate migration is pushing up the prices of new homes.

Some insights from our Managing Director, David Brown

There is a lot going on in the SEQ housing market right now and a lot of the influence is from well outside the local market.

A big uplift in the global demand for building products has led to price rises and delays on Australian construction sites.  

The whole world has gone 'renovation crazy' during Covid-19 and this is placing a lot of strain on supply chains in the construction sector. Primary materials such as glass, resin, steel and timber are in critically short supply and this is flowing through to building materials in Australia. Adding to the problems is the shortage of shipping containers and other logistics stress points (including beached 400m longships in the Suez Canal) that have led to increases of 300% to 500% in global shipping costs.  

One of our builders reported an increase of 14% on timber frames recently. They said there is no chance of moving to steel frames because that is even worse. Some plumbing supplies are increasing by 50% as published by Tradelink (one of the leading plumbing suppliers to the construction industry).   

It is not only materials cost increases either. Tradies are jacking up prices as there are more jobs than skilled tradespeople. Roofing is one of the most impacted trade segments with the double-whammy of the big increase in new home construction and the insurance work resulting from hail and storm damage in November 2020.  

Combine all of this with land price increases and a marked shift in demand for standalone homes and the pricing dynamics point to sustained increases in home prices across Southeast Queensland.   

The demand increase is being driven by a combination of the Government building boost and the big increase in net interstate migration into SE Qld. Right now, SEQ is attracting 88% of all of Australia's net interstate migration with the biggest inflow coming from Sydney. The estimate indicates that net interstate migration into Queensland will run at 21,500 people p.a. over the next few years which analysts from analysts at Collier's say is, ‘setting up pillars for a resilient property market’.

Other factors are also pushing the demand for homes. The onset of Covid-19 saw over 400,000 Australian ex-pats come 'home'. Many of them arrived back in Sydney and Melbourne to find the entry costs to the property markets prohibitive and hiked it into the Brisbane, Gold Coast and Sunshine Coast markets, pushing up the top end, prestige segment. And, there are signs of green shoots in Asian markets looking to move to Australia or invest in Australian property. The Asian real property group, Juwai, this week reported a 60% increase in online enquiries for Australian property that raised activity above 2018 levels. Add an increase in overseas buyers and the demand factors are going to be even more intense.

Then there is the 2030 SEQ Olympics factor. It is looking like a sure thing, but let’s leave that factor out of it for now.   We are seeing the prices of house and land packages increasing by $20k to $30k and more in some instances. Established family homes in outer-ring suburbs are being sold at the first open home with multiple offers above the listed price.

 In the face of all this, unit prices have not done much at all - but they are now on the rise as the buyers are looking for some affordability. Corelogic data for 28 Feb show unit prices rising 0.98% year on year with house prices at a new record - high median price with a 5.86% increase. The rate of growth for houses is almost 600% more than units.   This is classic economics 101: Demand increased, supply decreased. More buyers scrambling to buy fewer properties. Property listings are down 28% and in some areas, buyer enquiry levels are up by over 50%.

  What does this mean for property investors wanting to get into a rising market?

Simply put, the longer you wait - the more you will pay and the less benefit you will realise from the market uplift. You will pay more for land and you will pay more for construction and, you will have less choice.   If you want to ride this wave instead of watching it roll by, now is the time to be getting into the market. The team at Meridien have identified some clear opportunities in the market for growth and good income;

Family homes under $600k on ‘family sized’ land over 400sqm
Higher quality townhouses under $500k close to infrastructure
Competitively priced 1 and 2 bedroom apartments in urban hubs
We like the suburbs that are in-between the ‘new frontiers' on the edge of the suburban sprawl and the middle ring where in-fill and knock-down-rebuild are the game.
Our pick of locations

North

Petrie
Morayfield
Burpengary

South

Boronia Heights
Greenbank
Hillcrest
Holmview
Bahrs Scrub

West

Greater Springfield
Ripley – because it is the ‘New Springfield’

East

Most Bayside suburbs – if you can find land

Key Factors

Increasing Demand In Housing

More people – lift in net interstate migration and return of ex-pats.
More home buyers needing land – HomeBuilders Grant fuelled the market.
Global demand impact on building materials.
Asian buyers starting to look around.
Auction clearance rates at a record high.

Less Supply

Land supply constrained
Undersupply of materials and skilled trades
Property listings across Australia are down 10.5%

Prices Rising

Record median house prices for Brisbane, Gold Coast, Sunshine Coast, Ipswich
According to CoreLogic Median house prices are up;

1. Brisbane 1.5%
2. Gold Coast 2.6%
3. Sunshine Coast 2.6%