Demand for new homes,renos contributes to delays in major projects

Labour shortages,inflation,population growth and high real estate prices have constrained the property market in Queensland,prompting the Palaszczuk government to delay capital works.

The budget papers show private investment in new and used dwellings was meant to increase 20.5 per cent in 2021-22,but is now likely to hit 13.75 per cent and stay close to that level for several years.

Queensland’s building boom is having implications for the Palaszczuk government.

Queensland’s building boom is having implications for the Palaszczuk government.AP/Rogelio V Solis

That is despite high demand,including as a result of population growth,which hit 1.7 per cent last financial year and is still higher than Treasury projected.

“Reflecting this strong demand,there was a record $10.6 billion of residential work in the pipeline in December quarter 2021,easily eclipsing the previous record in 2016 during the inner-city apartment boom in Brisbane,” the budget papers state.

“However,despite the record amount of work in the pipeline,dwelling investment fell in December quarter 2021 and March quarter 2022 (although remains elevated).”

Rising prices meant the amount of money tipped into Queensland property slightly surpassed expectations,with 10 per cent growth which will continue in 2022-23 – defying Treasury’s previous expectation of a subsequent downturn.

That helped deliver a billion-dollar stamp duty windfall,plus greater collections in coming years,even though Treasury expects real estate activity to decline.

But with low rental availability rates and still rising prices,there is increased demand for accommodation across Queensland,particularly among the most vulnerable groups.

More Queenslanders are opting to renovate rather than buy,with renovation activity more than doubling to record levels since 2013.

More Queenslanders are opting to renovate rather than buy,with renovation activity more than doubling to record levels since 2013.Tony Moore

Treasurer Cameron Dick acknowledged the cost of living and housing pressures on Queenslanders,and said the government was doing what it could to deliver more social housing.

While the government accepted a parliamentary committee recommendation for a new mental health funding stream from a levy on big business,it did not specifically act on calls for more social housing.

“One of the greatest challenges is,it’s not finance ... but,of course,getting properties built,” Dick said.

QCOSS CEO Aimee McVeigh said if the government could build more hospitals it could build more social housing,referring to the health projects progressed in the budget.

“In the middle of a housing crisis and escalating cost-of-living pressures,the State Government must provide sustained funding and build more social homes,faster,” McVeigh said.

“The government has acknowledged that every Queenslander deserves a safe home to live in and that social housing is meant to be a safety net and yet we have more than 50,000 people waiting for a home on the social housing register.”

The budget papers also show more capital works being scheduled in later years,when projects may still be more expensive but the government hopes they will at least be deliverable.

That could add to tensions over the cost of delivering infrastructure for the 2032 Brisbane Olympics – the cost of existing projects such as Cross River Rail appear to be locked in – although Dick would only comment on the need for ministers and departments to manage projects appropriately.

“I think anyone who’s building anything at the moment knows the challenge of the cost of inputs for construction,and also labour costs,” he said.

Major projects may be delayed as building costs soar.

Major projects may be delayed as building costs soar.Toby Crockford

“But not withstanding that,we have committed to[a capital works spend of] $59 billion over four years.”

Dick said the government needed to achieve a balance between delivering capital works,partly to maintain service standards and jobs,and not adding to pressures in the building market.

The budget papers show more people are opting to renovate rather than buy,with renovation activity more than doubling to record levels since 2013. Where renovation normally accounted for about a third of dwelling investment in Queensland,it now accounts for almost half.

Sean Parnell is the Editor of Brisbane Times. He has won journalism awards for analysis,investigations,news and sport,written a biography,and has a Graduate Certificate in (Digital) Business Administration. Sean lives in Brisbane with his family.

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