“There’s endless land out there. They can just keep building. How can prices ever grow?” Investors ask us this about growth-corridor suburbs all the time, and on the surface it makes sense. But the same worry was raised about some of the best-performing suburbs of the past decade. So let’s test it against the data.
The oversupply argument
The argument goes like this. Prices come down to supply and demand. A suburb surrounded by paddocks zoned for housing has effectively unlimited supply, and that should cap capital growth. Sydney’s eastern suburbs can’t make more land. Melton can. So buy scarcity and avoid abundance.
One property commentary site said exactly this about Melton South in mid 2024. Developers were selling house-and-land packages everywhere, the “influx of houses will cause an oversupply”, and prices would stagnate or fall. As they put it: “Supply is the enemy of Capital Growth!”
In the 12 months to April 2026, Melton grew 14.8%.
When oversupply fears were right
The sceptics do get one thing right. This fear is not stupid, it has been right before, and knowing when it was right tells you what actually matters.
Ellenbrook, on Perth’s north-eastern fringe, was the textbook case. Through the mid 2010s it was exactly what the sceptics describe: estate after estate releasing lots into a market where demand had collapsed with the mining downturn. The median fell from around $560,000 in 2015 to around $480,000 in 2017, and analysts later named it as a suburb hit hard by oversupply in that period.
So yes, when new lots hit the market faster than new households form, and you paid at or above the cost of building new, supply hurts you. That is the actual rule. And it depends on two things, the pace of lot delivery versus demand and your entry price versus replacement cost. It does not depend on paddocks on a zoning map.
What Ellenbrook and Melton did next
Here is how those same suburbs look today. Every one of them carried the “endless land” tag at some point in the last decade.
Gracemere, the flat-land estate suburb outside Rockhampton: up 22.6% in 12 months on a $650,000 median (YIP). Davoren Park, written off for decades as Adelaide’s cheapest corner and hit again when Holden’s Elizabeth plant closed in 2017: up 18.9% (YIP). Marsden in Logan: up 17.8% (YIP). Ellenbrook itself, the oversupply poster child: up 17.7% to an $800,000 median (YIP), with REIWA showing $825,000 by June. Melton: up 14.8% (YIP).
And the rental side, where oversupply would show first: vacancy is sitting at 0.8% in Logan and 0.8% in the Rockhampton market (REIQ, September quarter 2025), 0.6% in Perth and 0.7% in Adelaide (SQM Research, June 2026). Suburbs drowning in supply do not produce sub-1% vacancy.
Past growth is not a promise about next year. The point of the chart is narrower: “lots of land nearby” did not cap these markets, because the thing that actually caps a market was moving in the other direction.
Buying below replacement cost
Here is the mechanism the land supply argument misses. In a corridor where new stock is constantly being built, the price of new stock becomes the ceiling every buyer compares against, and it is made of three parts: land, construction, and the developer’s margin. All three have gone one way.
Construction materials are 38.2% more expensive than in 2019 (Cotality Cordell, June quarter 2026). The median greenfield lot across the capitals is up 43% in five years (UDIA State of the Land 2026), with Adelaide lots up 23% and south-east Queensland lots up 17% in 2025 alone.
Put lot and build together and compare it with what established houses in the same corridors actually trade for:
A median lot in south-east Queensland ($488,360) plus an average Queensland build ($458,868, ABS FY2024-25 averages) is roughly $947,000 before landscaping, fencing or a developer’s margin. Marsden’s established median is $860,000. In northern Adelaide the gap is wider: roughly $767,000 to replace, $600,333 to buy established. In Melton the established median is around 38% below what land-plus-build costs across Greater Melbourne. If anything those build figures are conservative: Domain’s analysis of ABS approvals data had the national average build at $504,109 by March 2025, with Victoria at $589,080, and costs have kept rising since.
That gap is the moat. New supply cannot undercut you when the person building it must charge more than you paid. Every quarter construction costs rise, the floor under an established house bought below replacement cost rises with it. This is why we buy established houses in these corridors and never the house-and-land packages being built around them: the new stock is the expensive version of the same suburb.
One caveat from the same chart: Perth no longer offers the gap. Ellenbrook’s $800,000 median now sits at about what a lot plus build costs there. The below-replacement discount is an entry advantage, not a permanent feature, and Perth has already re-rated. That is an argument about which corridor to buy in next, not against the mechanism.
Zoned land is not supply
The other half of the answer is that the paddocks on the zoning map are not actually competing with you, because zoned land converts into titled, buildable lots at a crawl.
The UDIA’s 2026 State of the Land report quantifies the drip-feed. Since 2008, an average of 52 new estates entered the market each quarter, averaging 339 lots each. In the past year that fell to 42 estates per quarter, averaging just 145 lots. South-east Queensland finished 2025 with 0.4 months of lot stock against an ideal band of two to four months, which the UDIA calls critically undersupplied. Perth held 0.6 months. Developers cite infrastructure agreements and approval timelines, not a shortage of zoned land, as the constraint.
Zoom out and the same story is national: the Housing Accord needs roughly 60,000 completions a quarter to hit 1.2 million homes by mid 2029, and the first five quarters averaged about 43,800 (National Housing Supply and Affordability Council, March 2026). The country is not out-building demand anywhere, least of all in the corridors absorbing the population growth.
The mental image behind the objection is bulldozers releasing unlimited houses next door. The reality is a system that cannot keep pace with demand. While lot delivery runs below household formation, “developable land nearby” is a pipeline, not a threat.
How we vet a growth corridor
The land supply question is still worth asking on every purchase. It just has better tests than “are there paddocks nearby”:
- Price against replacement. Established purchase price versus current lot-plus-build in the same corridor. Below it, new stock protects you. At or above it, you need the other tests to be emphatic.
- Vacancy under about 1.5%. Oversupply shows up in rents first. Sub-1% vacancy and rising rents are the opposite signal.
- Lot pipeline versus demand. Months of lot stock, estate sizes, and infrastructure sequencing, not zoning maps. The UDIA publishes this annually.
- Timing in the cycle. Ellenbrook 2015 was supply landing into collapsing demand. The same suburb in 2023 was the reverse. Same paddocks, opposite outcomes.
This is the analysis behind every corridor we buy in, and you can see the results on real client purchases. The suburbs above are examples of the mechanism, not a buy list; which corridor fits depends on your budget, the cycle, and what the data says the day you’re buying.
What actually protects your price
When a client asks about land supply, the real question is “what stops this suburb being undercut?” The answer is arithmetic: established stock bought below the cost of building its replacement, in a corridor where lots title slower than households form and vacancy is near record lows. Scarcity was never about paddocks. It is about the price of delivering a competing house, and that price keeps going up.
Sources
- Ellenbrook suburb profile - Your Investment Property
- Davoren Park suburb profile - Your Investment Property
- Marsden suburb profile - Your Investment Property
- Gracemere suburb profile - Your Investment Property
- Melton suburb profile - Your Investment Property
- Ellenbrook profile - REIWA
- UDIA State of the Land 2026
- Home building costs rise, but not as much as feared - CommBank Newsroom / Cotality Cordell
- Perth’s past two decades of price movements - API Magazine
- Vacancy rate gridlock - REIQ, September quarter 2025
- Residential vacancy rates - SQM Research
- Quarterly report March 2026 - National Housing Supply and Affordability Council
- Cost of building a new house hits record high (ABS approvals analysis) - Domain
This is general information only and not financial advice. Market data reflects the sources and dates cited and can change. Past performance is not an indicator of future results. Speak to a qualified professional before making investment decisions.
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