Housing prices in regions just three years behind capital cities

Millions of Australians are considering a move to the regions, but a housing shortage is standing in the way of it becoming the nation’s economic engine room, advocates warn.

Housing costs in Australia’s regions are skyrocketing.

The opportunity for Australia’s regional areas to help drive the economy is being hamstrung by severe housing shortages, with median prices in the regions almost on par with metropolitan market figures just three years ago.

Regional Australia Institute chief executive Liz Ritchie was to tell a key housing summit in Canberra on Thursday that priority must be given to support the construction of one and two-­bedroom dwellings outside the big capitals to accommodate essential workers.

“Regional housing must be a priority, as it is putting a handbrake on our nation’s growth and prosperity,” Ms Ritchie said ahead of the summit.

“Our regions are gearing up to be the ‘engine room’ of the nat­ion’s transition to net zero – however, housing will be the key barrier to this growth.”

Regional Australia Institute chief executive Liz Ritchie. Picture: Bill Conroy

The summit was to hear that between March 2020 and December 2023, the median value of dwellings in capitals increased by 29.3 per cent from $643,540 to $832,193, while in regional Australia it grew by 54.2 per cent from $392,802 to $605,780.

“While it is still more affordable to buy in the regions, for now, there is no third option if locals or metro-movers are priced out of the market, and supply fails to meet demand,” Ms Ritchie said.

RAI research has found the rental market in the regions is increasingly tight, with vacancies at 1.2 per cent in 2023, down from 1.5 per cent the year before.

Fewer than one in four dwellings in regional areas are rentals, compared to one in three in capital cities.

People are flowing into areas such the Sunshine Coast, Greater Geelong, Lake Macquarie and Port Augusta.

The difficulty in finding accommodation is one reason behind significant worker shortages in key areas such as medical practitioners, nurses, carers and teachers.

“We need to plan for, invest in, and facilitate regional growth because more people want to move to regional Australia, up to 3.5 million in fact,” Ms Ritchie said.

“As a nation we’re not prepared for this changing shift in population. Thousands of jobs are on offer in our regional communities and to help fill those positions, we need more diverse housing options available.”

The summit comes in a week in which the Albanese government released the 2024 State of Australia’s regions, which provides data on regional infrastructure and other issues.

It notes for instance that saving for a house deposit takes 9.7 years in regional Australia, only marginally faster than the 10 years it takes in the cities. And monthly building approvals in the regions have been decreasing since August 2021.

It also finds access to high quality health, aged care, disability and community services is an ongoing challenge, and becoming harder the more remote the setting.

Master Builders Association chief executive Denita Wawn said all levels of government had to work together to remove the impediments to housing supply – zoning, planning and integrated land use. “As regional communities grow into bigger hubs of activity, the type of housing on offer needs to satisfy the needs of everyone in that community,” she said. “It’s not always about building out but building up with appropriate infrastructure and services in place.”

Denita Wawn.