Queensland

Housing supply not the driver for Queensland home prices: study

Increasing housing supply in south-east Queensland would not necessarily push down home prices, a study has found.

The AEC Group research, commissioned by the Local Government Association of Queensland, found movements in the share market, disposable family income and unemployment rates were stronger influences on SEQ housing prices.

The cranes over Newstead are a sign of increasing housing supply in Brisbane.
The cranes over Newstead are a sign of increasing housing supply in Brisbane. Photo: Michelle Smith

LGAQ chief executive Greg Hallam said the report showed the south-east Queensland property market was unique.

"You cannot assume that the factors driving prices elsewhere in Australia will apply to this region," he said.

"The report also underlines the spuriousness of claims that there is an undersupply of housing in SEQ. 

"In fact, the report states that stocks may be in oversupply."

Mr Hallam said factors affecting housing demand varied from one council area to another.

"For example, increases in disposable income had a strong influence on house prices in Logan and Ipswich but in Brisbane the big factor affecting house prices is the home loan rate," he said.

"When it comes to prices for residential units, on the Gold Coast home loan rates, real disposable income and the unemployment rate are the big influencers, while on the Sunshine Coast, movements in the All Ordinaries Index are significant."

The report found discrepancies between south-east Queensland and other areas in the state.

"Supply responds strongly to growth in house prices in Brisbane, Moreton Bay and Sunshine Coast but not for other LGAs (local government associations)," the report found.

"Lot registrations respond significantly to growth in unit prices for the Gold Coast."

AEC said its 2015 results were consistent with its previous study, undertaken in 2010.

"The findings of AEC (2010) was that the SEQ housing market does not behave similarly to the national market, demonstrated by the evidence over 20 years in SEQ that downward pressure on prices was not as responsive to positive increases in supply," it said.

"For the supply of residential land, it was also clear that supply responds to increases in prices, therefore other mechanisms may be required to enhance the supply of residential lots, which were clearly needed at the time to be higher than they were to have a greater dampening influence on prices."

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