New Builds Slump As Property Industry Slows
Over the last several years, we have witnessed unprecedented growth in the residential property market. Many states had established concessions and support for first-home buyers, and when the pandemic kicked off a price rise, states increased the support available. Despite this, many first-home buyers are wary to jump on the ladder.
"The cost of buying an established home, especially a renovator, may be dropping in other states, but here in Queensland, even a renovator's worst nightmare is still well out of the price range of most firm home buyers,” says Andrew Mackintosh, a leading building inspector in Brisbane.
“We've seen houses that could be considered utter lemons selling for record prices, with buyers under pressure to ignore, or even skip pre-purchase inspections.”
Luckily, the market has started to slow after successive interest rate hikes. However, as the property industry slows, so has the speed of new builds. It was inevitable, but the reasons are myriad. With the cost of materials going up, the speed of new builds was bound to slump. There have also been issues with sourcing materials for the last several years. However, another major issue facing home builders has been a shortage of skilled workers and trades.
But for Queensland, this was further compounded by the liquidation of one of its biggest builders – LDC Brisbane. The company has over $7 million in debt but has also left 48 projects unfinished. Additionally, 45 people are now unemployed. It might have been the industry's first casualty in 2023, but signs suggest it won't be the last.
The Pandemic Boom
Queensland was the only major state to see a boost in population throughout the pandemic. This, combined with the pandemic stimulus, kicked the market into overdrive. Now the industry is coming down from that high. It isn't just a slow in new builds, there has been a dip in home purchases as well.
In 2021, there was a new build boom. Queensland saw the biggest rise with an over 40% increase in new dwelling approvals. Tasmania was the nearest competitor yet was almost 10% less than Queensland's boost.
While many believed that the 2021 rebound would continue through 2022 and beyond, we now know that isn't the case. 2022 saw new builds in Australia drop by over 5%, compared with Queensland where the drop was almost 10%. Queensland experienced a 5% drop between October and November of 2022.
The good news for Queenslanders and those looking to relocate is industry experts believe the market will start expanding in 2025. By then, the industry will be in a more favourable position because the economy is set to balance itself out.
There is additional pressure on the commercial industry with the 2032 Olympics looming large, which could impact the residential sector further down the line if the rest of the world's economy doesn't stabilise.
