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Speaking at the National Press Club earlier this week (16 May), the CEO of Australia’s peak real estate body shared her belief that rising short-term rental accommodation (STRA) is exacerbating regional Australia’s tight supply.
Anna Neelagama, the chief executive officer of the Real Estate Institute of Australia (REIA), believes “fixing housing — and regional housing — in Australia is quite simple.”
From her perspective, the answers hide in plain sight.
“We need to do two things: [make] better use of the homes we already have built [and] build more homes,” she said.
Australia’s housing outlook over the coming years has been described as “grim”, following forecasts from the National Housing Investment Finance Corporation (NHFIC) that the short-term national housing shortfall exceeds 100,000 homes.
For regional Australia, already struggling with a supply crunch as evidenced by previous reporting on REB that spotlighted the existing low-levels of stock in two of Queensland’s major regional centres, Ms Neelagama believes the problem is far more severe.
“It is telling that a regional supply shortfall is not provided as a breakout to this forecast by NHFIC,” she said, especially as increased migration threatens to place further strain on these markets.
“Regional housing is an area that has always needed greater attention,” she said, explaining different states and territories require different programs and levels of investment.
For example, approximately 53 per cent and 59 per cent of Queensland and Tasmania’s respective housing stock lies in regional locations, while in Victoria, this figure drops to 26 per cent.
The COVID-19 regional market boom, which she revealed was Australia’s “largest regional property boom on record,” had many positives and negatives for regional Australian markets.
“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,” she said.
Data recently made available by the Regional Australia Institute (RAI) found regional Australia’s population grew by 70,000 in the 2020–21 financial year, while regional migration this year is 16 per cent higher than pre-pandemic levels.
As a result of this population boom, Ms Neelagama detailed over 20,000 property transactions occurred in regional NSW during 2021 and 2022, over 9,000 more than the volume of sales achieved in Sydney during this time.
And while “we’ve now seen property transactions reverse back to pre-pandemic norms,” she noted “this is not the end of housing challenges in the regions”.
“Both supply and affordability remain a huge challenge,” she insisted.
She believes the surging popularity of STRA in recent years, which allows home owners to place their property on platforms such as Airbnb, removing it from the long-term housing market, “has had a particular impact on the regions.”
And while she noted STRA does produce positive side effects, Ms Neelagama explained “in some states, there is more short-stay accommodation in regional areas than [in] capital cities”.
“Tasmania records around 3,359 regional Airbnbs versus 2,218 in Hobart. Similarly, Western Australia has 5,463 Airbnbs in their regions versus around 5,022 in Perth.”
The REIA CEO urged the government to “fund the shortfall of housing in Australia and be clear what that means for regional Australia”.
In her speech, she stated: “It is fair to say that housing policy catering to Australia’s regions has historically been rather poor.”
More broadly speaking, she shared her belief that Australia requires “state planning ministers and LGAs to clear any planning backlogs,” adding “we need the Industry and Skills ministries to support Australia’s weakened construction sector to help fix the current building skills crisis”.
“REIA will have more to say on this with the impacts of short-stay accommodation on the permanent rental pool outlined in a new report coming soon,” Ms Neelagama concluded.
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