While Sydney and Melbourne have been making front-page headlines for their eye-watering median house prices, many housing markets in regional Australia have also become unaffordable.  

Demographia, the international housing affordability think tank, has found, once again, that Australia has some of the least affordable housing markets in the world.

According to Demographia’s survey, Sydney has the second-most unaffordable major-city housing market in the world, just behind Hong Kong.

Australia also earned the dubious distinction of having four of the ten least-affordable housing markets covered by the survey. Wingecarribee and Tweed Heads were ranked seventh and eighth on the list, and Melbourne was ranked tenth.

Demographia’s latest survey is particularly sobering because it covers major global cities like London, New York, and Singapore.

How could regional Australia, which has ample space for housing development, and is generally perceived as being less expensive and less economically dynamic than the capital cities, be on par with the global cities when it comes to housing affordability?

Centres for retirement and leisure living

For communities like Wingecarribee and Tweed Heads, soaring house prices can be attributed to droves of affluent migrants from the cities flocking to country destinations for retirement and leisure living.

Baby Boomers and cash-rich Gen-Xers move to these communities for lifestyle reasons. Oftentimes, these wealthy buyers will buy vacation property they will only occupy for two or three weeks every year. However, their impact on regional housing markets is both long-term and cumulative.

Sadly, soaring house prices in regional Australia are negatively impacting many residents because average incomes are lower in country towns and along the coastal seaboard than in the cities. As a result, households have to allocate more of their earnings to pay rent or meet their mortgage.

And despite the seeming abundance of land in the country, in some communities, planning restrictions meant to protect valuable agricultural land, in combination with measures that place buffers around water courses, mean that very little land is actually available for urban development.

The sale of public housing by state governments has also had an impact on city and regional housing markets. Many governments have liquidated both their employee and public housing stock in rural and regional communities, which has resulted in a reduced supply of affordable homes and increased competition in both rental and home-buying markets.