Regional households under stress
Rural and regional centres across Australia are suffering rising levels of housing stress because property prices have kept pace with the national property boom but pay increases have not, according to new research.
The study led by Australian Housing and Urban Research Institute (AHURI) researcher Professor Andrew Beer found up to 40 per cent of rental tenant households and up to 25 per cent of all households in some areas were suffering stress.
'In many rural and regional centres the pace of change within their housing markets has been substantial. Much of rural and regional Australia has been affected by the rapid house price inflation evident across Australia since the year 2000', Prof. Beer said.
'Critically, social housing provision is inadequate, while the private rental market appears undeveloped or under-developed; partly because of a shortage of investors, partly because of inappropriate planning regulations and, in some measure, as a consequence of the low wage, high variability labour markets in these regions,' he said.
The study, ‘The divers of supply and demand in Australia’s rural and regional centres’, looked at existing data and carried out case studies in 15 regions across Australia.
Among its findings were that around 40 per cent of rental households in Lismore (NSW) were suffering stress, 30 per cent in Colac (Vic), 25 percent in Townsville (Qld), 36 per cent in Denmark (WA), 28 percent in Barossa-Tanunda and Port Lincoln (SA), 21 per cent in Alice Springs (NT) and 15 per cent on the West Coast of Tasmania.
Prof. Beer said rural and regional housing markets often had particular characteristics which influenced outcomes.
'Regional housing markets have been affected by the same house price boom and subsequent affordability pressures that have influenced urban housing markets in addition to other contextual conditions that influence local housing markets. The fact is that, to date, analysis of Australia’s housing markets has largely focused on metropolitan (capital city) markets, to the detriment of understanding the impact of affordability and housing supply and demand in regional markets.'
Prof. Beer said many regions around Australia had been affected by the resources boom which had placed increased strain on many housing markets and resulted in a two stream market.
'One segment of the market is focused on high income, often temporary, mine workers; while the established population working in ancillary industries or not working at all are forced to compete for less expensive properties at the bottom end of the housing market,' he said.
Prof. Beer also noted that in many parts of rural and regional Australia the processes of housing provision are inadequate, insufficient land is zoned for development, there are often complex and overlapping regulations that impede supply and both public and private sector owners of developable land are often slow to release properties onto the market.
The report also highlighted the significant gap between the home ownership sector and rental accommodation.
'In large measure, home ownership has remained affordable in rural and regional Australia—particularly for those households already in home ownership. There is a relatively low level of housing stress among such home owners and some centres remain affordable both in absolute terms and relative to the capitals. However, there is clear evidence of market failure in the rental market and widespread concern among a broad range of stakeholders about the ability of low income earners to access affordable rental housing and transition from rental into home ownership in the short and longer term,' said Prof. Beer, Director of the Centre for Housing, Urban and Regional Planning at The University of Adelaide.
He said a significant number of people were excluded from home purchase by the lending requirements imposed by banks, including the need for substantial deposits and secure incomes.
These two requirements, in combination with relatively higher prices, were a significant impediment to entry into owner occupation and result in some households being trapped in private rental housing, Prof. Beer said.
The study recommended governments should first recognise that housing affordability is a major challenge for particular groups in rural and regional Australia. They must collect data on housing need and housing conditions generally in rural and regional Australia and better promote and target initiatives to rural and regional centres.
Full report: http://www.ahuri.edu.au/publications/projects/p40586
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