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In the December quarter alone, regional affordability dropped by 3.7 per cent, as people left the cities in droves.
HIA’s Affordability Index showed that regional affordability fell by 3.7 per cent over the three-month period, and it’s attributing that swing to an increasing number of consumers choosing to leave major hubs post-lockdown.
HIA’s economist, Angela Lillicrap, said there’s a notable increase in consumer preference away from cities towards detached housing and more lifestyle regional areas.
“Preliminary migration data shows more Australians left the capital cities in each of the first three quarters of 2020 than at any other time since records began in 2001. This involved an acceleration of retirement plans and fewer people moving to urban centres for work or education,” she said.
As a consequence of this shift in population, house prices in regional areas have outperformed the capital cities over the past year.
“The mismatch between the low supply of homes on the market and strong buyer demand has seen prices increase sharply over recent months. As prices continue to rise, more sellers will put their homes on the market. This will help to keep a lid on the sharp price increases that are occurring,” Ms Lillicrap said.
While regional areas witnessed the greatest drops in affordability, capital cities have not been immune, with city property values also posting gains, and leading to lower affordability.
The economist flagged Darwin as experiencing the sharpest decline in affordability during the quarter, falling from an index reading of 134.6 to 128.0.
“Despite this decline, Darwin is still considered a very affordable market. Brisbane and Adelaide followed with declines of 3.1 per cent, respectively,” Ms Lillicrap continued.
“Sydney continues to be the most unaffordable market with an index reading of 66.4 in the December quarter. Melbourne is also considered an extremely unaffordable market with an index level of 77.5.”
Even as property values push upwards, record-low interest rates are having an impact, according to the economist, who did note that “despite the decline, housing is considerably more affordable than the average over the past 20 years”.
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