A recent discussion at the Brisbane branch of the Urban Land Institute (ULI) Australia covered various topics, including affordability, population growth, and construction costs. The conversation highlighted four key themes, with the first being that the market isn’t broken, it’s just expensive. Since 2016, the median detached house price in Southeast Queensland has risen from around $554,000 to approximately $1.17 million.
Over the same period, average household income has increased by only about six per cent. This has resulted in buying a typical detached house now requiring more than six times the average household income, compared to just over three times a decade ago. The people who teach, care for patients, patrol streets, build homes, and operate local businesses can no longer afford to buy a detached home in the communities they serve.
Housing Demand and Population Growth
Population growth was another topic of discussion, with Queensland continuing to grow strongly. However, the composition of this growth has changed, with over half of Southeast Queensland’s population growth coming from overseas migration over the past four financial years. Interstate migration has eased considerably since the Covid years.
Speaker Overview and Key Question
Organisers posed roughly a dozen questions that spanned affordability, population growth, construction costs, infrastructure and the Olympics.
When asked about the biggest misconception in today’s housing debate, he said most people agree more housing is needed. Few are willing to admit that the solution may require different housing types. He emphasized that the market will likely need smaller dwellings and varied models. Michael directs independent advisory Matusik Property Insights, has aided over 550 residential projects, and writes the Matusik Missive.
Supply and Demand in the Housing Market
The answer was that underlying demand creates new housing, which is not the case. Capital creates housing, with developer profit driving the construction of new homes in Australia. Demand is necessary but not sufficient, as developers only commit capital when projects are financially viable.
Rising construction costs, higher finance costs, planning delays, and increasing delivery risks reduce the number of projects that proceed, regardless of the number of households looking for a place to live. Australia spends a lot of time discussing housing shortages but not enough time talking about development feasibility. Unless projects generate an acceptable commercial return, they remain drawings on paper rather than homes people can live in.
The discussion also touched on the Olympics and their potential impact on the housing market. While the Games will create economic activity, infrastructure spending, and job opportunities, they will also place pressure on the construction industry, which is already operating close to capacity. The likely outcome will be higher building costs and reduced housing delivery at a time when additional homes are needed.