THE urge to escape from Australia’s capital city’s throughout the pandemic has left regional areas to become less affordable at a faster rate than rest of the country.
According to HIA’s Affordability Index, which looks at the latest house and unit prices, mortgage interest rates and wage changes over the quarter, housing affordability all across the country has failed to keep up with rising prices.
“Housing affordability has deteriorated over the past year as house prices rose faster than the capacity of the typical household to repay a mortgage,” said Tom Devitt, economist from HIA.
While housing affordability has been a more significant challenge for Sydney-siders and Melbournian’s over the past 20 years, high levels of sea and tree changes, including interstate migration, has seen affordability in the rest of the nation, falling out of reach at a faster rate.
Hobart saw the biggest fall in affordability, with HIA’s index showing a drop in 22.8% over the year, followed by regional Tasmania at 13.6%.
Regional Queensland’s affordability fell by 10.3%, regional Northern Territory by 8.6%, regional South Australia fell by 8.1% and regional Victoria by 6.5%.
Recent research from AHURI also indicated the factors which have led to the greatest levels of growth in regional areas.
With the most successful areas all sharing factors such as being close to a larger state capital city, developed infrastructure, including transport and telecommunications infrastructure.
Additionally, these successful regional areas typically have important regional service roles, including as administrative headquarters for local or state, services, and health, education, commercial, and retail services.
While most other regional area’s saw dramatic declines, regional Western Australia saw the slightest decline in affordability at just 0.6%.
“Despite this deterioration, housing is still broadly more affordable than the average of the past 20 years, due to the record low interest rates making it easier to service a typical mortgage,” said Devitt.
Meanwhile both Sydney and Melbourne were also most impacted by international border closures. Leaving the city’s losing their typically high intake of migrants, international students and tourists.
“The number of people who left Sydney and Melbourne in the last year was tens of thousands more than the number of people who arrived. This is not unusual for Sydney but was a uniquely damaging development for Melbourne,” added Devitt.
While Australia’s regions may be becoming rapidly less affordable, regional migration is driving new economic activity and is potentially reducing congestion and affordability strains on capital cities.