Regional housing markets, which increased in value more than capital cities during 2020, will have different recovery needs in the wake of the pandemic, according to research by AHURI (Australian Housing and Urban Research Institute). 

The report, Pathways to regional housing recovery from COVID-19, conducted by researchers from the University of Tasmania, examines the consequences of COVID-19 for households in regional Australia.

The focus is on Tasmania as a case study of a regional economy. 

The Australian combined five capital cities’ dwelling prices index fell by 1.45% while the combined rest of state regions increased by 3.77 % at the end of November 2020. 

“This housing demand, most likely due to regional living being perceived as ‘safer’ than cities in a pandemic, is putting upward pressure on dwelling prices while lowering vacancy rates and reducing affordability in regional Australia,” says lead author of the report, Dr Julia Verdouw.

“In fact, while values in cities decelerated as a result of the COVID-19 crisis, regional values have been growing at 5% per annum, surpassing the growth rate in cities.”

 According to the report, an increase in demand for regional rental properties could be due to a slowing of investor activity, mostly likely reflecting lower investor confidence in the wake of fewer incentives to invest in property, increased numbers of tenants who owe arrears, policy which has protected tenants and lower migrant housing demand. 

“There is a risk that landlords may shape future risk mitigation strategies in ways that further exclude renting to lower income tenants because they perceive these groups to present a greater risk to rental revenue,” according to Dr Verdouw. 

Another important impact on regional housing during the pandemic has been that JobKeeper and the coronavirus supplement for income support recipients have buffered the effects of job and income losses. 

The winding back of these federal government economic supports will expose people to housing risk. 

In Tasmania, where employment is disproportionately reliant on industries significantly affected by COVID-19, such as tourism and hospitality, increases in income support masked pre-existing levels of poverty in the community. 

The research found that in Tasmania those who were the least affected by changes in their employment situation were those employed full-time. 

The situation of casual and self-employed workers was more precarious, with 70% of casual workers and 60% of self-employed workers experiencing a change in their employment situation.

“Our research identifies that a regional model for recovery requires specific attention to place. COVID-19 has exposed housing policy risks that must be addressed in their regional context,” says Dr Verdouw. 

“Government strategies to stimulate employment in local economies and establish strategic and targeted income protection measures for vulnerable groups will both need to be a high priority in underpinning regional housing stability.”