This research uses Tasmania as a case study to examine how COVID-19 has affected regional housing markets and communities. As with all regions in Australia, there are distinct differences across, and sub-economies within the state. The capital city area of Hobart has some features common to other capital cities including a more expensive housing market.
Regional housing markets have to-date experienced few serious consequences as a result of the pandemic and have behaved quite differently to those in capital cities, most likely due to regional living being perceived as ‘safer’ than cities in a pandemic.
Dwelling prices decreased by 1.45 per cent for five Australian capital cities’ (Sydney, Melbourne, Brisbane, Perth and Adelaide) between March and November 2020, while the ‘combined rest of state regions’ increased by 3.77 per cent; capital city unit rents dropped by 5.4 per cent, while house rents increased by 1.1 per cent. The higher housing demand in regional areas may be short-lived, which means the effects of the freeze on international migration will be reflected in lower prices over the medium-to-longer term.
The drop in Hobart rents comes after several years of significant increases, which were reflected in low supply relative to demand, low levels of new rental stock and a reduction in permanent rental supply as short-term rentals became popular with investors.
Recovery policies should be place-based, scaled appropriately, targeted to need, funded appropriately, deliver long-term benefits for local areas and would include large-scale investment to increase the supply of secure, affordable housing, especially social housing; regulation of short-stay rental markets; and diversification of employment opportunities to reduce over-reliance on specific employment industries.