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Since the pandemic began, there’s been a faster decline in regional affordability than what’s been seen in capital cities, according to new research.
HIA’s latest affordability index found that while affordability has declined across all states and territories over the past year, including both the capital cities and their surrounding regions, the most acute deterioration was witnessed in the regions.
The report revealed that over the past 12 months, regional New South Wales saw the biggest decline in affordability across the nation, down by 22.8 per cent.
In contrast, the most significant fall in capital city affordability was witnessed in Hobart, where affordability fell by 18.7 per cent.
HIA economist Tom Devitt has explained that the rapid exodus of population out of Sydney and Melbourne to other states and regions has largely driven the faster decline in regional affordability.
“Over the past two decades, housing affordability was a greater challenge in Sydney and Melbourne than the rest of the country, but since the pandemic began, it is the rest of the country that has seen a faster deterioration in affordability,” he said.
“This is not surprising given… [that] 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.”
The absence of demand from international buyers, overseas migrants, students and tourists due to border closures has also negatively impacted pricing in the capitals, according to the economist.
But despite overall deterioration in housing affordability nationwide, Mr Devitt said housing is “broadly more affordable” compared to an average calculated over the past 20 years, which he indicated as mainly due to record-low interest rates that make it easier to service a mortgage.
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