No quick fix to regional housing affordability crisis: RAI

The current accommodation shortage in many regional towns and cities will take time to reverse, the Regional Australia Institute has said.

Twenty regions ranging from Port Hedland to Ballina and Townsville to Burnie have residential vacancy rates of 0.5 percent or lower, a situation that threatens to delay work on infrastructure projects aimed at bolstering economic recovery post-Covid-19.

Besides contributing to labour shortages, the situation is also complicating local government efforts to package regional centres as attractive alternatives to living and working in the capital cities.

RAI chief economist Kim Houghton, pictured, said there were two factors at work in the current crisis:

  • Long-term under-investment in residential housing in regional areas; and
  • Regional planning predicated on low or predictable population growth.

“A lot of regional planning has been done using ‘business-as-usual scenarios,” Mr Houghton said this week.

“So, many regions haven’t been prepared for the significant uptick in growth that’s been one of the unexpected outcomes of Covid-19.”

However, many regional councils have responded quickly to the crisis, working with developers to open new residential lots, selling land, and contributing to community housing projects via loans.

“There are some innovative things going on in many places because they [the councils] feel like they’ve got to take some leadership,” Mr Houghton said.

“The smaller the council and the more remote its location, the more active it has to be … in taking land to market and doing early-stage development.”

Mr Houghton cited the Temora Shire Council in southern NSW as an example of a local government “jumping in and trying to make a difference quickly”.

Median house prices in the shire have increased 63 percent over eight years and the area is also facing a shortage of stock.

Temora Shire Council has responded by, among other things:

  • holding “boom time forums” with developers to talk about opportunities and encourage investment;
  • establishing a temporary housing register asking for spare rooms and granny flats to accommodate workers constructing a local solar farm;
  • working towards adopting a development infrastructure deferred payment policy allowing developers to repay costs of council-owned infrastructure like roads drainage and sewer when lots are sold or within 10 years; and
  • inviting talks with landowners of undeveloped land, incentivising businesses to relocate to industrial areas to free up brownfield developments, and identifying redevelopment opportunities.

Mr Houghton will deliver a keynote address at ALGA’s Regional Forum on 20 June providing an overview of the regional housing market based on the RAI’s own data and encouraging more visionary thinking.

“Remote councils have to take a much bigger role in creating a housing market where the cost of a new build is way above the price of existing housing stock – which is what has driven the historic under-investment,” he said.

“Very few councils have pots of capital they can tap to bring new land to market and that’s why there hasn’t been this kind of development.”