Toowoomba Land Supply
A recent investigation by professional property analysts were commissioned to undertake their research into residential land supply situation in Toowoomba.
Their research concluded that “the Toowoomba housing market the market was recovering strongly especially in the past couple of years.”
Sales volume slowed down yet price of vacant land increased on the back of a shortage of new development approvals, particularly around new land estates, already impacting the market.
Toowoomba land remains undersupplied even thought their land market continues through a recovery phase of the property cycle.
The effect of the current undersupply is more severe than it was in late 2017, yet land sale volumes are rising as are land prices.
The positive effects of the First Home Owners Grand plus HomeBuilder government stimulus packages continues to lift buyers interest in Toowoomba, and across Australia. A stimulus package that is working to the benefit of the building industry and want to be owners.
Covid-19 has also stimulated a growing demand on regional towns and cities as Australians prefer to escape capital cities for improved and healthier lifestyles. This is placing upward pressure on supply of new property and vacant land. An unexpected, yet beneficial spin off from an awful situation.
Subdivisional Land Supply
Toowoomba lacks sufficient subdivisional land and is thus negatively affecting housing affordability. This same lack of supply and new development will inadvertently affect local job market as building demand decreases because there is no land available or being released for development. A catch 22 situation which will result in an increasing demand that in turn drives up prices because of a very low supply, unable to keep up with the rising demand.
As an investor, can you identify the investment potential of securing land and building a home. If owners cannot buy to live, they will become your tenant. Lack of supply of land equates to a rise in demand for Rental Properties, this in turn results in very low vacancy rates and thus increased rental yields. A perfect storm is brewing in places such as Toowoomba and other regional centres undergoing the same scenarios being experienced here.
Jobs in Toowoomba
Did you know that the construction industry accounts for around 18% of Toowoomba’s local job market, that equates to around 13,350 people employed on a full time basis in the construction industry whereas 73,750 is the number of total full time employees in Toowoomba.
Construction is an important economic driver in Toowoomba, (and again across Australia, hence government stimulus packages being provided) that could be impacted by a lower number of new homes being built.
Construction accounts for around 23% of Toowoomba’s economy.
Toowoomba has around 170k residents and planned to grow by around 1,650 new residents per year. What this means is that the demand for new properties is sitting at just over 600 new detached houses in Toowoomba every year going forwards. Keep in mind that each new house will require it’s own vacant lot to be built on. Demand continues to increase, yet supply continues to decrease. There is a problem here.
Current demand versus future supply
Currently the Queensland government estimate that there are just under 3,500 allotments approved but yet to be developed. Meaning 5.5 years of supply only.
Research discovered that 2,083 allotments remain to be sealed across 24 land estates; meaning only 3.3 years of supply, not the above mentioned 5.5 years. A significant shortfall in supply.
The same research identified that 5 of the existing estates holding around 783 undeveloped lots are too difficult to build on for various practical reasons, and thus should be excluded from the count. The result is that the approved supply then drops to only 1,303 lots and only a pitiful 2 year supply. Are you getting the full picture now?
Currently there are only 418 lots for sale in Toowoomba, the research discovered which equates to a mere 6 month supply.
The Queensland Government stated that during the next 5 years, an additional 2,700 lots could be added to the Toowoomba supply. There could arise some pragmatic constraints which will negatively affect this new supply but for the sake of our blog let us assume that all 2,700 lots are supplied this equates to a total supply to meet demand for a pitiful 4.3 years.
Drastic Shortage of new land supply
The research picked up that Toowoomba has only 2 year supply of subdivisional approvals, sitting below the 4 year minimum SEQ Growth Monitoring recommendations and today the area has less than 6 month supply for sale.
It would be irresponsible for the Toowoomba Regional council to not fast track new subdivisional development applications and also to not take into consideration to expand their residential zoning to facilitate the required residential property demand.
Read further Dan Dwan’s article on LinkedIn here