Why Land Lease Will Become Housing for Every Australian — When the Banks Catch Up

By Veritas Land Lease Estates | 5 min read

A working generation is being shut out of the Australian housing market — not because they aren't trying, but because the system no longer adds up. Yet the solution to that crisis already exists. It is affordable, it is proven, and it is being built right now. The only thing standing between land lease housing and every Australian is a finance system that has not caught up — yet.

The Problem Is Not Going Away

Australia's affordability challenge is among the most severe in the developed world.

The national median dwelling value now sits at $941,864 — up from $849,000 just twelve months ago. The median house price to household income ratio has hit 8.9 times average income, up from 6.6 times just five years ago. It now takes the average household roughly 11 to 12 years to save a standard 20% deposit, and only 15% of median-income households can afford to buy at all — near the lowest share since records began in 1995.

This is not a temporary squeeze. The market is bifurcating. Capital is becoming more selective, and from here the assets that win will be practical, tangible and income-producing — not whatever simply rises with the tide. Higher mortgage rates, climbing insurance premiums, rising council rates and relentless maintenance costs have permanently reset the cost of traditional ownership. For a growing share of Australians, the maths of the family home no longer works.

So the question is no longer whether we need a more affordable way to own. We do. The real question is why the one we already have is not yet available to everyone.

The Affordable Model Already Exists

Land lease communities solve the hardest part of the affordability problem directly. They separate the cost of the home from the cost of the land — the single largest driver of unaffordability in this country. Residents own their home and lease the land beneath it, replacing the unpredictable, compounding costs of freehold ownership with one transparent site fee.

The result is a genuinely lower entry point, no stamp duty on the home, predictable ongoing costs, a new and energy-efficient build, and access to community amenities. It is not a downgrade. It is the same goal — owning a quality home — reached at a fraction of the cost.

And it already works. Australia's land lease sector is now worth around $12 billion, with approximately 130,000 residents already living in these communities and over 44,000 purpose-built homes in operation nationally. Yet only 1.0% to 1.5% of Australians aged 55 to 85 currently live in one. In the United States, the comparable figure is closer to 8%. That gap is not a sign of weak demand. It is a sign of a model that has barely begun.

So Why Isn't It Already Housing for Everyone?

Here is the honest answer. Finance.

Because residents own the home but lease the land, there is no land title for a bank to mortgage. And for most of Australia's major lenders, no land means no loan. Mainstream finance has largely stayed away from the sector.

That single fact has quietly shaped who land lease serves today. The model works beautifully for downsizers — Australians who can sell a family home and pay cash. But the people who need affordability the most are exactly the ones who cannot. The young couple. The first-home buyer. The key worker. The single-income household. They are locked out of the most affordable ownership model in the country — not because they cannot afford the home, but because they cannot borrow against it.

The bottleneck in this sector has never really been demand. It has never been supply. It has been finance.

When the Banks Catch Up, Everything Changes

This will not stay the case for long. The sector is maturing quickly. Major institutional operators are scaling it. Site agreements are becoming more standardised. Resale markets are deepening. Specialist lenders are beginning to build products around land lease homes, and governments under enormous pressure to deliver affordable housing are increasingly looking at this model as part of the answer.

As mainstream finance follows — and it will — the addressable market expands almost overnight. The day a young family can borrow against a land lease home the way they can against a freehold one is the day this stops being a niche for a single demographic.

That is the inflection point. Today the sector is led by the over-50s, who Colliers and UDIA expect to drive around 75% of new dwelling demand over the next two decades — in large part because they are the ones who can pay cash. Open up finance, and the same affordable model becomes available to everyone else. Demand for an additional 200,000 land lease homes is projected over the next 20 years — the supply challenge ahead is significant.

A New, and Cheaper, Asset Class

Two things happen at that moment, at the same time.

For residents, land lease becomes the most accessible legitimate path to owning a quality home in Australia — a genuinely cheaper way to own, in communities purpose-built with lifestyle and connection in mind.

For capital, it becomes a resilient, income-backed asset class with high occupancy and recurring, indexed revenue — delivering 22% margins and 18% internal rates of return according to Colliers' land lease community market overview. These are precisely the practical, tangible, income-producing assets that perform best in a more selective market.

New asset classes do not emerge often. This one is forming now — cheaper for the people who live in it, and durable for the people who fund it.

"The homes are already affordable. The day the finance catches up is the day affordable ownership opens to every Australian."

Built for What Is Coming

33 On Goodwood, delivered by Veritas Land Lease Estates, is being built for exactly this future. Affordable, quality homes in a well-located and fast-growing Bundaberg community, designed to be accessible to all Australians — not the market of a decade ago, and not a single demographic.

Homeownership is not dead. The model that revives it is already here. When the banks catch up, land lease will not be the alternative to the housing market. It will be the housing market — and it will be open to everyone.