Supply, affordability issues and the proliferation of short-term rentals are impacting the regions, says peak body head
Supply, affordability issues and the proliferation of short-term rental services like Airbnb are creating a housing crisis for regional Australia, according to the chief executive of the Real Estate Institute of Australia.
Speaking at a National Press Club forum on Australia’s housing crisis, REIA CEO Anna Neelagama examined the housing shortfall in regional areas.
She said that the National Housing Investment Finance Corporation predicted that the nation would be about 106,000 homes short of the number of homes needed by 2024-2025.
“It is telling that a regional supply shortfall is not provided as a breakout to this forecast by NHFIC,” Neelagama said. “At the same time, last week’s budget papers forecast overseas migration to grow to 400,000 in 2022-23 and 315,000 in 2023-24.
“Fixing housing – and regional housing – in Australia is quite simple, and we know, for the most part, the answers,” she said. “We need to do two things. One: Better use of the homes we already have built. Two: Build more homes.”
The COVID-19 boom
Neelagama said that while the regions were once seen as bastions of affordability, that changed with the advent of the COVID-19 pandemic.
“COVID-19 saw the biggest regional property boom since the Great Financial Crisis, and the largest regional property boom on record,” she said. “There is good news in this, as many faithful regional property owners were able to capitalise on extraordinary market conditions, and we saw many, many new entries and first-time buyers into Australia’s regional property markets.”
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“A record amount or volume of home sales were transacted,” Neelagama said. “To put this in perspective, over 2021 and 2022 there were 20,000 regional property transactions in regional NSW, and less than 11,000 property transactions over the same period in Sydney.”
Neelagama said that although the COVID boom has receded, challenges remained.
“We’ve now seen property transactions reverse back to pre-pandemic norms. However, this is not the end of housing challenges in the regions. Both supply and affordability remain a huge challenge,” she said. “The direct and indirect consequence of the COVID-19 investment and Australia’s migration forecasts remains to be seen, and this story is very much yet to play out across Australia’s regions.
Short-stay issues
“Finally, we’ve seen in the past years the rise and rise of short-stay accommodation, which has had a particular impact on the regions – some of it positive and some of it not,” Neelagama said. “The reality is that in some states there is more short-stay accommodation in regional areas than capital cities. Tasmania records around 3,359 regional Airbnbs, versus 2,218 in Hobart. Similarly, WA has 5,463 Airbnbs in their regions, versus around 5,022 in Perth.”
Neelagama said that REIA would have more to say about the impacts of short-stay accommodation on the permanent rental pool in a forthcoming report.
Government action needed
Neelagama said governments needed to work harder to address the housing crisis.
“We need government to support the building and fund the shortfall of housing in Australia and be clear what that means for regional Australia,” she said.
“We need state planning ministers and LGAs to clear anty planning backlogs. We need the Industry and Skills ministries to support Australia’s weakened construction sector to help fix the current building skills crisis.”
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