Regional Australia is experiencing a housing crisis, as rents and housing prices have reached record highs in the past quarter. According to real estate data firm CoreLogic, home values in regional areas increased by 2.1 percent in the three months leading up to April 2024, marking the highest quarterly increase in nearly two years. In comparison, house prices in capital cities rose by 1.7 percent during the same period.
CoreLogic economist Kaytlin Ezzy noted that housing affordability has continued to deteriorate for both tenants and prospective home buyers. Regional home values saw a slower recovery compared to capital city values but have now regained the losses from the previous downturn and reached a new record high. Among the 50 non-capital city areas studied, 19 markets reported record-high growth.
The top three performing regional areas were Geraldton, Busselton, and Bunbury, all located in Western Australia. Bunbury also had the highest growth over the year, with a 20.7 percent increase in the 12 months leading up to April 2024. Queensland had four of the top 10 markets, while New South Wales, South Australia, and Tasmania had one each. On the other hand, Ballarat in Victoria and Port Macquarie in New South Wales experienced a 2 percent drop in value.
Ezzy explained why Western Australia and Queensland were ahead of other states and territories in terms of housing market performance. She attributed it to the diversity in economic activity, including agriculture, tourism, ports, and mining. These factors, coupled with higher levels of interstate migration, relative affordability, and low supply levels, contribute to the strength of these markets.
In addition to rising housing prices, rents have also soared across regional Australia. On average, rents increased by 6.3 percent in the past year, up from 4.9 percent in the previous 12 months. In contrast, capital cities saw a slight drop in rental growth from 9.6 percent to 9.4 percent during the same period. Out of the 50 regional markets studied, 47 saw their rental prices go up, with 37 reporting record growth. Batemans Bay in New South Wales had the most significant quarterly rise at 6 percent, followed by Bunbury in Western Australia (up 4.7 percent), and the Sunshine Coast in Queensland (up 4.4 percent). Bunbury also ranked at the top in terms of yearly growth, with a 16.4 percent increase.
However, not all regional areas saw an increase in rental prices. Nowra-Bomaderry, Maryborough, and St-Georges Basin-Sanctuary reported a drop in rental prices. This indicates that while the overall trend shows rising rents, there are still localized variations.
Amidst the housing crisis, some state governments are calling for a reduction in overseas migration to alleviate pressure on housing demand. Queensland Premier Steven Miles recently backed Opposition Coalition Leader Peter Dutton’s proposal to cut migration intake by 25 percent over the next two years. The Queensland government reported a population increase of 144,000 people or 2.7 percent in the 12 months leading up to September 2023, with 88,000 coming from overseas. Miles expressed concerns over the pressure on the housing system and urged the federal government to consider moderating migration levels to assist with population growth.
Overall, the housing crisis in regional Australia is characterized by skyrocketing home values and rental prices. While some areas have seen significant growth, others have experienced declines. The call for a reduction in migration reflects the need to address housing demand and ensure the availability of affordable housing options for Australians.
