Bad day for developers in Queensland – risk to future investment and jobs

At a time when the Queensland economy is experiencing a huge negative shock from the downturn in the resources sector, and at a time when the health of our recovering building industry is very important, it is discouraging that some major proposed developments in Brisbane and the Sunshine Coast have been subject to adverse decisions today (see Cedar Woods approval to be reassessed and Emotions spill over after Sekisui proposal voted down).

I don’t object to community members having a say on development issues, but I’d implore decision makers to consider the need to promote economic development and jobs and to improve housing affordability by boosting supply. Also, decision makers should consider that the developments that have been subject to adverse decisions are in desirable locations that would be great places to live, and might help limit development in outer-lying areas, for which transport costs to and from business districts are much higher. Without a more encouraging attitude toward development, there is a risk that developers will put possible projects in the too hard basket, and the Queensland economy will miss out on important investment and jobs.

I’ve previously commented on the Cedar Woods development:

State & local govts need to allow development to boost housing supply – Gap mega-suburb would be a good start

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10 Responses to Bad day for developers in Queensland – risk to future investment and jobs

  1. Another day, another step towards being a command economy. 🙂

  2. Quite right Gene. Trad says that the Cedar Woods decision will be based on “planning not politics” and yet it would seem that the decision had already been made on planning! Which would suggest that her determination to reassess is indeed all about politics.
    Either local government has the power to make planning decisions or they don’t. State governments (of both colours) need to butt-out of interfering in planning decisions that have been delegated to local governments. Failure to do so simply adds to developers uncertainty and therefore ultimately results in less economic benefits.

  3. Jim says:

    Neither the Cedar Woods or Sekisui developments were anything but relatively high end developments. So it is probably a bit of a long bow to claim knocking back these sorts of developments has any impact on housing affordability for lower income people (where policy makers and planners should actually be taking a keen interest).

    House blocks in Cedar Woods would probably be $400K+ based on land near the development. And the transport infrastructure supporting the sight already faces significant congestion. While the development is geographically quite close to the Brisbane CBD, travel times to the CBD are already quite high. A bus from adjacent to Cedar Woods (there is no train) takes about the same time to reach the CBD as the train from Springfield (where block prices and potential transport externalities are both much lower). If your policy objective is to tackle housing affordability and avoid externalities, where would you approve additional housing lots?

    Local governments in SEQ have already approved over five years supply of developable land, yet developers have only released less than one years supply onto the market. Why? Create artificial scarcity and keep prices and margins up.

    The development on the Sunshine Coast is also for high-end accommodation and there is already approval for development to four stories high. Sekisui knew that when they purchased the land and the restrictions were reinforced in the 2014 town plan. Their application for the bigger development (10 stories) was rent seeking of the highest order.

    Economists should be contributing to the debate on housing affordability and planning, but we need to be a bit more sophisticated than simply suggesting we move the land supply curve to the right and the problem will be solved.

    • Gene Tunny says:

      Thanks for the comments, Jim. Lack of supply seems to be the big problem to me, but I’ll have a think about your comments. Your point about the behaviour of developers is an interesting one – obviously they have to develop the land at a pace that makes sense from a financial perspective to them, but I’m unsure whether they can be accused of deliberately conspiring and colluding to create artificial scarcity. That’s a big call.

    • Jim says:


      I didn’t mean there was some big coordinated conspiracy theory by the developers. Simply, the profit maximisation position for developers is to release land slowly, irrespective of how much has already been approved. Because this profit maximisation strategy is the same for all developers, we end up with constrained supply across the whole market. Developers are acting completely rationally within the market that they operate.

      I suspect there is actually a problem with the land-market and associated institutions. The solution probably involves land markets, information asymmetry, planning regulations, public infrastructure provision and developer contributions all be sorted out simultaneously. Not an easy task given the incompatible incentives and vested interests involved.

  4. Katrina Drake says:

    Great comment Jim. I personally am encouraged by the brave decision to re-call Cedar Woods approval. While it may have had local government planning approval – there was no sign of any visible planning involved. Brisbane citizens expect more than a quick developer cash grab nowadays – we want to see planning for transport infrastructure, NBN, renewable energy, schools, parks and facilities. Unfortunately, all levels of government have to work co-operatively to achieve proper master planned suburbs.

    Cedar Woods was only ever going to be at the detriment to the inner city suburbs of Ashgrove, Enoggera, …. Better to look towards developments at Springfield and Mango Hill , where train lines and suitable infrastructure is being offering in the master planning.

    • Gene Tunny says:

      Thanks for the comment, Katrina. I’d note that the provision of public transport infrastructure to outer-lying areas such as Springfield and Mango Hill is costly, and train lines in particular may not pass a cost-benefit test.

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