How locals are being priced out by the regional housing boom

 In Home News Section, Uncategorized

About 18 months ago, Dan Bakker and Gabby Rose hit a milestone.

“It was looking like we were starting to get well positioned to get out of the rental market and into owning a patch of dirt ourselves,” Mr Bakker said.

After spending the best part of a decade saving, they thought their $100,000 deposit would get them a fixer-upper or block of land in their local area near Bermagui on the far south coast of New South Wales.

They were looking for something in the $300,000 to $400,000 range.

“Unfortunately, at the same time, the more and more our capacity was looking positive, prices started to go through the roof,” Mr Bakker said.

“Within two or three months it was evident that we were going to struggle to afford anything at all.”

There have not been many homes for sale in their region since the Black Summer fires and COVID-19.

According to CoreLogic data, house prices in the Bega Valley went up almost 22 per cent last financial year to a median price of $647,536.

“Clearly, these prices down here aren’t big numbers for those living in the city. But for a regional family making do with regional incomes, we have to work a lot harder, a lot longer and deal with less down here,” Mr Bakker said.

“It certainly feels like we’re being priced out of our local area.”

‘Thought we would’ve found something by now’

CoreLogic data shows home values in regional Australia rose 17.7 per cent in the year to June 30, compared with a 12.4 per cent rise in the capital cities.

Regional NSW and regional Tasmania saw the biggest median price rises, growing 21.1 per cent and 20.8 per cent respectively.

Maria Yanotti is an applied economist from the University of Tasmania who has been researching regional housing markets during COVID.

She said low interest rates and government stimulus had kept the housing market ticking over, but the pandemic and lockdowns had also changed demand — more people can work from home and many want more space.

“A lot of these regional housing markets were under stress before COVID-19,” Dr Yanotti said.

“Obviously, this has been exacerbated with COVID-19, with people seeking those areas getting away from the capital cities, not only because of COVID and changes in preferences, but because those markets tend to be more affordable than the capital cities.

“Also, people are just staying in the regions where they grew up, rather than trying options in the city.”

Ray Young is one of those who would like to buy in his local area, rather than moving.

He was born and raised in Launceston, Tasmania, and now works as a teacher and celebrant in the area.

He and his fiancee Charlotte Boatwright, a speech pathologist, have been looking for a house in Launceston since May last year.

“I thought we would’ve found something by now,” Mr Young said.

“It just keeps rising, the prices become higher and higher for the properties that we’re kind of looking for and everyone in our age bracket seems to be looking as well, it’s pretty competitive.”

House prices in the north-east of Tasmania have risen 28 per cent in a year.

The couple has put in a few unsuccessful offers and broadened their search to include almost every suburb in Launceston, and blocks of land.

‘Very hard to get a place to rent’

Mr Young and Ms Boatwright feel lucky because they are in a secure rental situation.

But regional rent prices have also grown by a higher percentage than capital city rents over the past year.

“And vacancy rates have been very low,” Dr Yanotti said.

“We’re seeing vacancy rates below 2 or even 1.5 per cent, so it’s very hard to get a place to rent.”

Adele Graham has been renting on the NSW Central Coast for 13 years.

The financial counsellor and her three children had to move out of their home in Gosford, NSW last year when their landlord hit financial stress.

Ms Graham struggled to find anything in her budget.

“There just wasn’t really anything big enough,” she said.

“But the couple of properties that I did um and ah about were way outside of our price range.”

She eventually found a rental half-an-hour away, but it is $100 more per week and the house only has three bedrooms for the family of four.

“There were times where I was struggling to sleep at night. We were really lucky to get anything at all,” she said.

Ms Graham works a nine-day fortnight, and even with the recent increase to Commonwealth rent assistance she spends almost half her weekly income on rent and water.

She said she was worried about some of the people she saw seeking financial counselling.

“There are families up on the coast that are homeless at the moment because there’s not enough properties or there aren’t properties that are within their affordability.”

Dr Yanotti said regional areas often have more narrow employment opportunities, lower wages and more socioeconomic disadvantage than capital cities.

“There has been a fair bit of discussion about how this pandemic has exacerbated inequality and the differences between those that have more than those that have less,” she said.

‘Preoccupation with buying is completely flawed’

Michele Adair, chair of the Community Housing Industry Association NSW, said regional Australia had a serious lack of affordable housing supply.

“We are now seeing professional people, who have never in their lives imagined that they would have housing insecurity, simply not able to rent, let alone buy,” Ms Adair said.

The most recent federal budget included an extra 10,000 New Home Guarantees for first homeowners to build or buy a new house with a 5 per cent deposit, and 10,000 guarantees for single parents to buy with a 2 per cent deposit.

There were also superannuation incentives to help younger Australians enter the property market and older Australians to downsize.

In a statement, the Minister for Housing, Homelessness, Social and Community Housing, Michael Sukkar, said those schemes were helping Australians overcome the hurdle of saving a deposit.

“Almost 30,000 home buyers have already purchased a home with a deposit of as little as 5 per cent, with more than a third choosing to buy their first home in a regional area,” Mr Sukkar said.

Ms Adair said the “preoccupation with buying is completely flawed”.

“It’s actually one of the reasons that we have a completely broken housing system,” Ms Adair said.

“And is probably artificially fuelling the market and creating instability.

“We are seeing more and more people being so heavily geared that it is extremely dangerous, and I feel when the bust comes the demand for crisis services is going to be even greater than it is today.”

HomeBuilder scheme ‘outperformed’ in regions

The federal HomeBuilder scheme was aimed at stimulating the construction industry and economy.

Mr Sukkar said the HomeBuilder scheme had “outperformed in regional areas” where 50,000 new dwellings were approved in the past 12 months.

“The significant increase in new housing supply in regional areas thanks to HomeBuilder will help manage demand pressures,” he said.

But the scheme is for owner-occupiers, and Ms Adair said it was unlikely to create the kind of targeted affordable housing needed in regional Australia.

Ms Adair said all levels of government could free up land for affordable housing.

“We have to embrace the fact that having a safe, secure, affordable home is a human right,” Ms Adair said.

“And that housing is not purely a wealth creation vehicle for people that are already probably wealthy enough or privileged enough to be in the ownership market.”

Dr Yanotti said there was not a one-size-fits all approach that would relieve housing pressure in regional areas, and that measures needed to be specific to local areas.

“So it has to be cooperation and integration of solutions that come from federal government, but go down to the local level to make changes in those places.”

Watch this story on 7.30 tonight on ABC TV and iview.

(Original ABC Article)