Waterfront CBD blocks are not the places to build affordable homes
Brisbane just approved 2,200 riverfront homes with zero affordable units — but is the loudest criticism actually targeting the wrong problem?
Brisbane has just approved 2,200 new homes on the last major vacant parcel of land on the city's northside riverfront, and the loudest criticism is that none of them are designated affordable. That criticism deserves a harder look than it is getting.
The argument for an affordable housing mandate at Northshore Hamilton sounds intuitive. Queensland has one of the least affordable housing markets in the country's recorded history. Only 9 per cent of homes are within reach of a median-income household. The government is approving 2,200 new dwellings on public land, and it is letting every one of them go to market rate. To an opponent, that is an obvious moral failure.
But intuition and analysis are different things. The question worth asking is not "should the government do something about housing affordability?" — yes, obviously — but "does mandating affordable units on prime riverfront land actually produce affordable housing in any meaningful quantity, at any reasonable cost per unit, in any way that a dollar spent differently could not do better?"
The answer, when you look at the mechanism rather than the intention, is almost certainly no.
Mandating affordability on expensive land shifts costs; it does not reduce them
Land value is the foundation of housing cost. A riverfront block 4 kilometres from the Brisbane CBD is among the most expensive land in Queensland. When a developer is required to sell a fraction of their units below market rate on that site, one of two things happens: the developer prices the market-rate units higher to recover the lost margin, or the project becomes financially marginal and does not proceed, or proceeds with fewer homes than it otherwise would. The affordable units do get built. But the effective cost per unit, once you account for the cross-subsidy and the drag on overall supply, is extremely high compared with building the same unit somewhere that land is cheap.
The affordable units do get built. But the effective cost per unit, once you account for the cross-subsidy and the drag on overall supply, is extremely high compared with building the same unit somewhere that land is cheap.
Deputy Premier Jarrod Bleijie's stated rationale — that high-end riverfront apartments free up suburban housing stock as downsizers vacate family homes — is not a radical idea. It is a reasonable description of how housing chains work. When supply is added at the top end, it creates movement through the market. It is not a complete solution, and it is not fast, but it is a real mechanism.
The real question the government has not answered
The more honest critique of the Northshore Hamilton decision is not about affordable housing mandates. It is about whether the government has a credible plan to produce affordable housing at scale somewhere else, using the proceeds from selling premium land at market value to fund construction in locations where the numbers actually work. If it does not — and so far there is no evidence that it does — then the absence of a mandate starts to look less like smart economics and more like a policy vacuum dressed up as one.
This is a pattern worth watching in Australian housing debates more broadly. Mandates get attached to the highest-profile developments because those are the ones with political visibility. The resulting affordable units are a gesture rather than a solution: too few, too expensive to produce relative to their value, and concentrated in locations that are not where people needing affordable housing typically need to live. Meanwhile, the genuinely productive levers — releasing land at scale, reforming planning rules that block density, and funding social housing construction in places where it pencils out — get less attention because they are less visible and less immediately satisfying as political symbols.
The data on demand-side approaches to housing — subsidies, grants, and mandated discounts — consistently shows that they transfer costs rather than reduce them. The subsidy is absorbed into the price, or into the cross-subsidy, and the underlying supply problem remains. Building 2,200 homes on a site that previously had none is a supply-side win. The mistake the government appears to be making is treating that win as a substitute for a housing affordability strategy, rather than as one component of one.
Queensland has just sold its best riverfront land to five developers at market rate. That is probably the right call for that specific site. What it is not is a housing affordability policy. The government needs to answer a question it has so far avoided: where is the affordable housing actually going to be built, and with what?
Sources
ABC News — Brisbane riverside development to unlock 2,200 homes but none affordable
realestate.com.au — Housing affordability at record low, cited in ABC News report
Frequently Asked Questions
Why isn't the Brisbane riverfront development required to include affordable housing?
The Queensland government approved the Northshore Hamilton development as fully market-rate, arguing that mandating affordable units on prime riverfront land is an inefficient way to produce them. Land costs on a CBD-adjacent riverfront block are among the highest in Queensland, meaning any affordable unit produced there carries an extremely high effective cost compared with building the same unit on cheaper land elsewhere.
Does building luxury apartments actually help housing affordability?
There is a real but slow mechanism at work: when high-end apartments are built, downsizers and others who move into them vacate suburban homes, freeing up stock further down the market. The effect operates on a long lag and is not a substitute for direct affordable housing construction, but it is a genuine supply-side contribution.
What happens when developers are forced to include affordable units in a project?
One of two things typically occurs: the developer raises prices on market-rate units to recover the lost margin on the discounted ones, or the project becomes financially marginal and proceeds with fewer homes — or not at all. The affordable units that result are real, but their effective cost, once the cross-subsidy is accounted for, is high relative to what the same money could produce on cheaper land.
Why do housing affordability mandates keep getting attached to high-profile developments?
High-profile developments have political visibility that lower-profile sites do not, making them attractive targets for mandate campaigns regardless of whether they are the most efficient place to produce affordable housing. The result is that affordable units end up concentrated in expensive locations where they cost more to produce and may not be where people needing affordable housing actually want to live.
What should the Queensland government do instead of mandating affordable homes at Northshore Hamilton?
The more productive approach is to use proceeds from selling premium land at market value to fund affordable housing construction in locations where land costs make the numbers viable — combined with planning reforms that enable density and large-scale land release. The unanswered question is whether the Queensland government has committed to doing any of that with the Northshore Hamilton sale proceeds.