Improving signs for Queensland property market as inflation subsides
Market forces that have challenged the Queensland development industry are subsiding and giving developers renewed confidence to begin projects to meet high migration to the state, industry leaders said today.
At a special Round Table forum hosted by property industry specialists Media Hunt in conjunction with Ocean Road Magazine, the head of Australia’s largest building company, Hutchinsons, and other industry leaders reinforced the incredible future ahead for the industry.
Addressing industry at Royal Pines Resort today, Hutchies Chairman Scott Hutchinson, the keynote speaker, said high inflation and higher interest rates had created a “triple whammy” for the market – with build costs sending builders to the wall, developers unable to make projects feasible, and buyers wary given upward interest rate trends.
However, he said these forces were stabilising and the challenge now would be for the industry to deliver projects to meet the high migration demands which are seeing almost 50,000 people a year coming to Queensland.
“The big challenge now is how to we find enough tradespeople to deliver much needed projects to the market in such a high migration environment where housing demand has probably never been higher,” said Mr Hutchinson.
“This is accentuated by the fact that there is so much competition for trades due to the extraordinary amount of public infrastructure spending by governments because of Queensland’s popularity, growth and the coming 2032 Olympics.”
His comments were echoed by integrated property advisory group Urbis, which added that careful planning was required to ensure the retention of the lifestyle that was drawing almost 1000 people a week to Queensland.
“We are acutely aware of the growth trajectory that Southeast Queensland is on and there is certainly a dire need to make sure we get our growth plans right as we manage the exciting future prospects of the region,” said Mr Paul Riga, Director of Urbis.
“The Gold Coast is forecast to see an increase of around 150,000 residents between 2022 and 2037, requiring around 60,000 dwellings.”
“To achieve this we will need to ensure opportunities for low and middle income housing with strong connectivity to public transport and core lifestyle amenity. In doing this we cannot lose sight of the importance of urban design and the increased sense of community this can bring.”
Discussion also focussed on how governments could improve the viability of the industry to meet market demand and address housing affordability.
Dan Marino, Director of Hickey Lawyers, said scrapping the GST on developer sales would improve viability.
“Where escalated building prices and increased costs of finance are frustrating feasibilities, giving back tax and stamp duty relief to developers may reverse an unfeasible development with a 7-10% starting margin that may result in more active development,” he said.
“Reform of tax to accelerate development and building activity is problematic but could definitely be considered.”
Developer builders John Kearney (Greyburn) and Robert Badalotti (Azzura) both acknowledged the advantages of retaining their own builders in the current market.
“It has been a definite advantage for us in terms of being able to control price and create more certainty around delivery for our customers,” said John Kearney, of Greyburn Builders, who is also developing Rhythm Kirra Hill at Coolangatta.
Robert Badalotti, one of the most longstanding Gold Coast developers who has delivered thousands of homes and apartments in Queensland over three decades, is set to embark on the second stage of the four stages of his $3.1 billion Imperial Square development at Southport.
“Having our own build team combined with the strong migration certainly gives us the confidence to begin the next stage,” said Mr Badalotti.
“I am very bullish about the Gold Coast and in particular Southport as the city’s undisputed CBD. Migration will remain very strong over the next decade and people including retirees will continue to flock to the Gold Coast.”
Having sold out his first stage Regal Residences, Azzura is now planning to release Monarch Place to the market which will include luxury residential apartments and a state of the art over 65s retirement village.
Jayde Pezet of the city’s leading boutique project marketing firm Pezet Matheson echoed the sentiment with strong sales attributed to developers with excellent credentials, longstanding industry relationships, and a track record of delivering on promises.
“We are seeing an unprecedented time in the construction sector. However, sales remain strong and developers that are highly credentialed, hold long standing industry relationships and can deliver are succeeding in the current market,” he said.
“Many of the larger companies have announced that they will be forging ahead by creating their own construction arms, seeing the emergence of the developer/builder. Though the underlying fact is that there is a shortage of skilled trades, which is not simply overcome by additional construction companies.”
Matt George of Urban Activation stressed the significance of a builder's history, delivery track record, and financial strength in instilling buyer confidence.
“Developer history, delivery and financial strength of the builder that the developer has partnered with are the key to buyer confidence. These are the questions we are hearing from every purchaser prospect.”
He also shared his perspective that “Purchasers are looking for certainty. Often, they are too late for the projects under construction and want as much certainty as possible for an off the plan purchase.”
Andrew Erwin of NPA Projects predicted a shift towards smaller boutique developments over towering structures. He emphasised the pivotal role of esteemed, reliable builders in instilling buyer confidence.
“Future off-plan projects should have construction underway or a definitive commencement date before launching marketing campaigns to assure buyers of the builder's reliability.”
Attendees included Scott Hutchinson (Chairman of Hutchinson Builders), Matt George (Urban Activation), Jayde Pezet and Todd Matheson (Pezet Matheson), Paul Riga and Patrick Hefferan (Urbis), John Kearney (Greyburn), Dan Marino (Hickey Lawyers) Robert Badalotti and James Vallis (Azzura), and Andrew Erwin (NPA Projects).