AHURI BRIEF

Why housing matters in the decentralisation debate

What barriers prevent people from moving to rural and regional locations?

Last updated 8 Nov 2017

The Select Committee on Regional Development and Decentralisation is currently inquiring into best ways to support regional development and the decentralisation of Commonwealth and corporate entities, including the economic impacts of moving Government departments to regional cities and ways to encourage larger businesses to follow them.

Businesses and their workers tend to cluster in major cities due to the benefits of agglomeration. Economies of agglomeration are characterised by firms working in proximity to each other—usually clustered in large cities—reaping cost efficiency and knowledge sharing benefits to innovate and create new products and services. However, there are also productivity costs for businesses and the general economy when cities become more populated. AHURI research shows that workers (and particularly low-income workers) in capital cities such as Sydney have to live a long way from work; have long commute times; face expensive rents; and are competing against high income households to buy housing.

If rural and regional areas are to counteract the historical ‘pull to cities’ and compete with the dynamics of agglomeration, higher wages, greater employment opportunities and levels of services, then having a reliable supply of affordable, quality ‘to-buy’ and rental housing will play a key role.

AHURI research published in 2011 on housing in regional and rural areas revealed a number of barriers that can inhibit workers (and their families) moving to rural and regional locations. These are detailed in Table 1 below.

Table 1: Barriers that can inhibit workers (and their families) moving to rural and regional locations

Housing related barrierDescription

Investment risk

It can be risky to buy housing in areas dependent on one employer or industry as house buyers can be stranded with an unsaleable housing asset if markets change.

Zoning restrictions

In rural regional towns, land zoned for housing can be constrained in order to retain land for  agriculture; to avoid areas at risk of flooding; due to the proximity of National or State Parks; and to protect run off into water catchments. Local zoning laws may also require subdivisions to target larger blocks of land rather than smaller ones that might be more suitable to build cheaper more affordable houses. Overall, these factors can lead to insufficient supply of housing in rural areas, particularly housing for low income households.

Expensive housing due to seasonal demand

In rural and regional areas low paid workers must face relatively expensive rental housing due to increased demand caused by an influx of seasonal workers (such as for fruit/vegetable picking) and competing for housing from more affluent Fly in/Fly out workers, retirees and tourists.

Lack of capital for housing and revitalisation

Incomes in rural areas are often lower than in cities meaning that the quality of housing is of poorer quality. AHURI research published in 2002 found that ‘many smaller rural communities do not have the necessary capital to initiate successful revitalisation efforts. The provision of quality housing for rent and purchase is expensive (and often beyond the means of local communities), but critical in addressing problems such as economic decline, depopulation and rural poverty’.

Lack of essential services

Smaller rural and regional communities can also lack services for children (such as local high schools); for those with a disability; for older householders (e.g. aged care); and have no crisis accommodation (such as for people escaping domestic violence) or housing suitable (and affordable) for young people first entering the workforce. These smaller communities often have no or very limited public transport, which means households are dependent on owning, or having access to, a car.