Pebbles amongst the stones
A key mindset to solving the our housing supply problem
The housing market - like any market - is ultimately about supply and demand.
And right now, Australia is running short on supply, particularly when it comes to affordable housing options for those starting out.
There’s no denying we’re amid a housing crunch.
And when using southeast Queensland (SEQ) as a typical example, population growth across the southeast corner of the state has been strong for a decade and is accelerating.
With around 74,000 new residents arriving each year, and projections suggesting between 70,000 and 100,000 newcomers annually through to 2036, SEQ could see another 700,000 people by the time the Olympics roll around.
To accommodate that growth, we’ll need to build between 38,000 and 54,000 homes every year. But here’s the kicker - while demand is booming, supply is not keeping pace, especially in the affordable bracket.
The median house price across SEQ is now $1 million. The entry-level (bottom quartile) median sits at $800,000 - up 60% since 2021. And where nearly 60% of house sales in 2021 were under $700,000, just 15% were in that price range last year.
For first home buyers, the numbers don’t stack up. Entry-level homes now cost 7.3 times average household income.
So, it’s no longer “priced for starting out” - it’s priced for stars.
This sentiment now applies to most major urban markets across Oz and many of our regional centres too.
But there is hope - and again back to SEQ - it’s coming from the west.
Ipswich is quietly positioning itself as SEQ’s most accessible housing market for new buyers. And it’s doing it through smart planning, updated codes and, crucially, by embracing what I like to call the “pebbles amongst the stones”.
Too much of Australia’s and SEQ’s planning is still hung up on two extremes: sprawling detached houses on big blocks, or mid to high-rise towers that are expensive to build, manage and live in.
Ipswich City Council’s new Ipswich City Plan addresses the pebbles among the stones - small-lot homes, townhouses, walk-up apartments and backyard dwellings.
Here’s why this matters: most people don’t want to live in a small apartment.
Apartments are too small and too costly to run, with high body corporate fees and insurance. They’re also too expensive to build, at over $650,000 for a 90m² apartment in SEQ, compared with $400,000 to build a 150m² townhouse or $475,000 for a 250m² detached house.
And remember these are base building costs and they exclude the price of the land, financing and marketing coast plus development overheads. My Urban Squeeze post from about a year ago, outlines how much it costs to purchase these housing products across SEQ.
But it’s not just a building issue - it’s a land one too.
In SEQ, only 8% of urban land is sized under 350m². In Sydney and Melbourne, that figure is 22%. In Adelaide, 19%. Even Perth sits at 12%. Here (again in SEQ) just 2% of newly approved blocks are under 200m².
The Sunshine Coast is one exception - 35% of new lots there are under 350m². Logan City is moving too, allowing some infill lots as small as 120m².
Ipswich’s population is forecast to double in two decades. Their new planning scheme is modernising development codes, reducing outdated car parking requirements and allowing for smaller lots. That’s how you build more affordable homes, fast.
And the demand is there. Our work suggests 68% of SEQ’s future housing needs could be met by gentle density or the missing middle. In Ipswich, that figure could hit 73%.
This is good news. Ipswich is re-making itself as the place where people can start out, buy in and build up. That’s the kind of thinking Australia needs - less focus on tall towers or big lots and more on practical, affordable, middle-density options.
Because if we want to house tomorrow’s population - and not just the wealthy few - we need to build for starting out, not just for the stars.
And right now, Ipswich looks like it’s leading the way.
Matusik housing demand consultancy work
This is a summary of the work that we recently completed for Ipswich City Council.
My firm undertakes numerous housing demand studies, for both the private and public sectors, each year.
I have developed a housing preference model which is based on forecast lifecycle segmentation and local affordability touch points, plus importantly being sensitive to local housing type/design bias.
Maybe you are interested in knowing what your target market really wants when it comes to new housing. The product they will pay a premium for, which also reduces your sales risk and makes you more profit.
I mean who wouldn’t!
Or maybe you want to know which housing products you should be advocating in your local area, not only now but in the future too.
Imagine leading the pack, rather than just being part of the queue.
Interested in knowing more?
Then send me a message.