Regional boom becoming a crisis for local buyers and renters

The regional property boom has turned into a crisis for many local buyers and renters who are now priced out of the market.

REA Group senior economist Eleanor Creagh said the interstate migration trend that has been boosting the regional markets over the past year has led to many locals struggle to compete with newcomers.

“The cost of renting a home has increased dramatically in some regions, leaving locals to struggle to compete against largely white-collar sea- and tree-changers on big city salaries,” Ms Creagh said.

As vacancy rates in some regions hit 1%, rents have surged, pricing out many local tenants.

In fact, some suburbs in regional New South Wales and Victoria witnessed rents double from last year, up by more than $500.

Rents in regional Queensland also grew significantly, with some suburbs realising a 30% annual growth or more than $200 per week rent hike.

Ms Creagh said the flight to the regions has provided an opportunity to take some pressure off the capital cities.

“However, the sustainability of these shifting urban growth trends is clearly being called into question, with socioeconomic inequalities on the rise,” she said.

“As such, it has become hugely important to address the issues surrounding the sustainability of pandemic-induced growth in regional Australia.”

Ms Creagh called the trend a double-edged sword — while people leaving capital cities find comfort in the regions’ relative affordability and liveability, many locals are left struggling to compete as house prices and rents continue to surge.

“It’s not good news for those who don’t yet own a home, given saving for a deposit is even harder with both rents and house prices growing,” she said.

It becomes more concerning looking at how house prices have outpaced wages growth.

Ms Creagh said the growth in regional prices have outpaced wages by almost 15:1, worse than the 13:1 ratio on a national perspective.

“The accessibility of housing in general and the shortage of housing stock in the regions stand out as two of the big issues here,” she said.

However, Ms Creagh believes that it is easier to roll out new housing supply in the regions than in capital cities.

“However, we’re not sure if the policy debate has received the appropriate time and attention warranted for sustainable regional growth,” she said.

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Photo by Christopher Lemercier on Unsplash.