The huge growth in property prices in regional areas could cause long-term housing problems, according to a new report released by the Australian Housing and Urban Research Institute (AHURI).
Conducted at the University of Tasmania, researchers found that property price growth in regional Australia was nearly double what it was in the 5 major capital cities.
With people moving to regional areas and so-called ‘rentvestors’ buying up property to rent on, there is a squeeze on low-income people based outside capital cities, as housing stock is squeezed and low vacancy rates allow rents to rise.
Dr Julia Verdouw from the University of Tasmania, who authored the report, said that while the data was tracking in one direction, it was hard to say if the massive growth could continue.
“I can't answer with any deal of certainty, but we certainly know that regional markets have been experiencing increased demand from inward migration,” she told Australian Broker. “We can only really guesstimate as to why, but obviously there's been a lot of anecdotal reporting the media about it being because people perceive it to be a safer place to live through a pandemic than in a city. But also, people are now uncoupling the need to work from a physical office and can do that at home.”
“There's a couple of reasons why people might want to move to regional areas and the data would suggests, at the moment, that is definitely an issue. Our report was up to November but if you look at the data that is ongoing, we can see that regional areas are still experiencing higher growth in dwelling values which would indicate that there is increasing demand on housing for those areas.”
“As to the reasons why, we don't know how long this will go for and it is the nature of the pandemic: we saw values fall and now they're rising again, and what happens to population and migration over the next year or number of years is going to play a big role in what we see happening in the regions. If we had to predict anything, we might say that the pressure will remain for a while but might taper off.”
Dr Verdouw is based in Tasmania and told Australian Broker that she could see first-hand how population growth was contributing to housing issues on the island.
“This isn't what we looked at in the report, but more anecdotally, we know more broadly that we have been experiencing a housing crisis for years,” she said. “I started tracking it in 2017 and my focus has been short-stay accommodation and what is happening there.”
“In that market, we can see that people have been buying to invest. We have also seen population growth that is not just older generation, but also families. Our interest is what that does to the housing market, and over the last couple of years we have had positive population growth, some of which has been younger people now returning to live in family homes but in their 30s and 40s coming back to work in Tasmania.”