The Housing Industry Association’s (HIA) Affordability Index is calculated for each of the eight Australian capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.
The latest report to June 2021 shows that affordability across Australia’s regional property markets has deteriorated at a faster rate than the capitals due in part to the flight of populations out of cities:
“Over the past two decades, housing affordability was a greater challenge in Sydney and Melbourne than the rest of the country. Yet since the pandemic began it is the rest of the country that has seen a faster deterioration in affordability.
“This is not surprising given the rapid exodus of population out of Sydney and Melbourne to other states and regions.
“The number of people who left Sydney and Melbourne in the last year was tens of thousands more than the number of people who arrived. This is not unusual for Sydney but was a uniquely damaging development for Melbourne.
“In addition to this, Sydney and Melbourne suffered disproportionately from the closure of international borders and the associated loss of overseas migrant, student and tourist arrivals.
“This is why the deterioration in housing affordability was most acute outside of Sydney and Melbourne…
Across the regions, regional New South Wales saw the biggest deterioration in affordability in the nation, down by 22.8 per cent over the year. This was followed by regional Tasmania (-13.6 per cent), regional Queensland (-10.3 per cent), regional Northern Territory (-8.6 per cent), regional South Australia (-8.1 per cent), and regional Victoria (-6.5 per cent).
These results make sense given regional markets have grown in value at a much quicker rate than capital cities:
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Regional property markets growing faster.
I expect these trends to continue over the foreseeable future in light of Sydney’s and Melbourne’s hard lockdowns, which are likely to drive more city residents away to greener pastures.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
