AVJennings pulls southeast Queensland project as housing approvals slow despite population boom
Gold Coast housing development has slumped despite a rise in population. Picture: Nigel Hallett
Home builder AVJennings has pulled out of a major development site in southeast Queensland, citing application delays and rising infrastructure costs, with its move coinciding with a slump in new housing through the region.
The residential developer will no longer progress with its option for a 3,500 lot site at Caboolture, north of Brisbane, which was expected to be finalised late this year. The company will take a $17.2m hit from the decision.
In an announcement on the ASX, AVJennings noted key assumptions about what was required to deliver the project dubbed Rocksberg had changed, particularly around costs and forecast revenues.
“Expected development and infrastructure costs have increased significantly since the Option was entered into and have not been matched by increases in forecast revenue,” it said. “The extended length of time until meaningful returns could be expected to flow to the company would put significantly greater pressure on the company’s balance sheet than originally contemplated.”
AV Jennings CEO Phil Kearns. Picture: Supplied
AVJennings chief executive Phil Kearns told The Australian this month that it takes an average of seven years from acquisition for a developer to see a return on their investment, noting that infrastructure costs and government charges added around $200,000 to the cost of a newly built home.
The announcement comes as dwelling approvals throughout southeast Queensland slumped across the board last year despite the region welcoming thousands of new residents since the start of the pandemic, putting additional pressure on the stretched housing market.
Property consultancy RPM’s May South-East Queensland Greenfield Market Report has revealed a 28 per cent slump in apartment approvals through 2023, while detached housing slipped by 8 per cent drop and townhouses slipped 2.5 per cent.
The southeast corner of Queensland has experienced a massive influx of interstate migrants in the four years since the pandemic, which spurred a swift rise in property prices of as much as 80 per cent in some parts. The latest Australian Bureau of Statistics data named the Gold Coast and Sunshine Coast as the nation’s two fastest growing regional area in 2022-23, with their populations expanding by 2.9 per cent and 2.7 per cent respectively.
The state government’s SEQ Regional Plan states an average of 34,552 dwellings are required each year between 2021 and 2046 to meet heightened demand. Currently, overall approvals are sitting just above 32,000. Additionally, too few new development opportunities are being made available, falling well short of targets. Only 18,783 new dwelling lots were registered in southeast Queensland in the year to March 2024.
RPM’s Queensland managing director Clinton Trezise said the report, which covers the region from the Sunshine Coast to the Gold Coast and west to Scenic Rim and Toowoomba, also revealed the lack of new supply has created a “knock-on” effect on pricing.
“Apartment prices have been hit on two fronts – a lack of supply and rising costs,” he said.
