The work from home revolution has helped trigger a migration to the regions. Now, locals say they have nowhere to live.

The work from home revolution has helped trigger a migration to the regions. Now, locals say they have nowhere to live.
  • Pandemic-induced uptake of hybrid and remote work has seen “knowledge workers” migrate to the regions in droves, pricing locals out of the market both as renters and buyers.
  • Experts say it isn’t just the rate of homelessness that’s alarming, but that it has become more prevalent among middle income earners.
  • The Greens and the federal Labor Party have each presented election policies to address the problem, but industry advocates say action is needed sooner.
  • Visit Business Insider Australia’s homepage for more stories.

Affordable housing has drifted far out of reach for many Australians. But for residents of regional Australia, housing supply is being suffocated by a pandemic-induced migration and steepening construction costs.

Complex lending processes and unaffordable risk premiums are suppressing much of the regional housing market, experts say, while workers on as much as $86,000 are on the brink of homelessness, pushed out of a rental market swarmed by remote “knowledge workers”. 

Michele Adair, the CEO of one of NSW’s largest community housing providers, Housing Trust, and chair of the peak body for community housing in the state, said the circumstances are as much of a human crisis as climate change is. 

“We have such a shortfall in affordable rental housing now, really, our government should be having a conversation, ‘Well, if we don’t fix it, who are we going to leave homeless?,” Adair told Business Insider Australia. 

“It’s really that dire. It really is.”

Adair said the situation is at its worst in Australia’s coastal areas, where the strain added to the local housing market by remote workers is being compounded by homeowners looking to cash in while the housing market runs red hot. 

“Many parts of New South Wales have effectively zero rental vacancies. So, we’ve got renters having homes sold out from underneath them, because, you know, somebody is going to make a windfall,” Adair said. 

“So that situation is making the rental crisis even worse,” she said. “And typically, in the past, we used to see worse social housing waiting lists in metropolitan Sydney. But that is no longer the case. Now we are seeing [waiting lists as long as] five to 10-years, plus.”

It’s a sentiment that was echoed by City of Sydney councillor Linda Scott, who told the House of Representatives standing committee on tax and revenue that regional mayors from across NSW are reporting an alarming uptick in homelessness.

“We know that in some regional areas there is high growth and they’re growing faster than anticipated due to recent changes in migration patterns,” Scott said. “However, in other communities there simply isn’t enough affordable housing for key workers, sadly. 

“In others, due to high housing costs, an increasing number of people are sleeping rough. 

“Issues such as changes to recent migration patterns, cheap finance and labour, and material shortages in the construction sector are all currently having an impact on the supply of housing,” Scott said.

Not only are Australia’s regions facing higher exposure to homelessness, but those earning higher salaries are also facing increased risk. Adair said supply had become so fickle, in part, because of climbing construction costs, but also because of the proliferation of holiday rentals courtesy of Airbnb. 

“Kiama, on the [New South Wales] south coast, is one of the least affordable local government areas in Australia, right? And that’s to live in,” Adair said. 

“I was chatting to one of the candidates standing in the council election [there] in the next couple of weeks, and he has a two bedroom home, with space downstairs which he leaves for holiday rentals, or Airbnb,” she said. 

“And this fellow found out that there was  a doctor, a fully qualified doctor, who was basically homeless and desperate for a home to be able to conduct their medical practice, because there was nowhere for them to rent anywhere in the Kiama LGA.”

Both the Greens and the federal Labor party have each established election policies to address the problem. 

If the Greens are able to hold the balance of power at the next election, they promise to build 1 million affordable homes for Australians both locked out of the market, and in rental distress. 

Under the policy, 125,000 homes would form part of a shared equity ownership scheme that would offer buyers between 50% and 75% of their home’s equity, via access to a low-interest loan. 

A further 750,000 new public housing properties would be built under the scheme in a bid to reduce waiting lists and homelessness, in addition to 125,000 universal access rental homes. 

Meanwhile, Anthony Albanese’s Labor Party promises to create a $10 billion off-budget Housing Australia Future Fund to build 20,000 social housing properties over its first five years, 4,000 of which will be allocated for women and children fleeing domestic violence and older women on low incomes who are at risk of homelessness.

For buyers in regional Australia today, the state of play doesn’t offer much cause for optimism.

Appearing before the House of Representatives standing committee on tax and revenue, Kim Houghton, chief economist from think tank Regional Australia Institute, issued an urgent call on MPs to establish a home guarantee exclusive to regional Australia to lower the barrier to entry.

“One of the key issues that we find in our more inland places and smaller markets — not high growth population centres but the ones inland — is that those markets are stalled because of the combination of banks requiring quite large deposits,” Dr Houghton said.

“[That’s] because there are very few transactions for them to base their market evaluations on, coupled with the build costs being much higher than the existing median house price,” he said.

Dr Houghton explained that banks have come to charge a high risk premium for new-builds in markets where there are a proportionately low number of transactions, a trend accompanied by surging construction costs, making building a home near impossible. 

Queensland’s Mount Isa, for example, home to ​​one of the most productive single mines in world history, has seen just one house built over the last 12 months. 

In a recent research paper, the Regional Australia Institute suggested that the market has also failed to supply the regions with the right mix of dwellings, which “misses the middle” of medium density in regional Australia. 

“We know that in those markets the consumers and residents want that mix of housing,” Dr Houghton said. 

Yet, what the development sector is providing is typically the easy win, which is the outer suburban peripheral growth, and we’re not seeing that medium density, even in these growth markets,” he said. 

“That would bring the price points down and slow the rate of price growth. But, for some reason, those signals aren’t getting through to the developers.

“So that’s the market failure in those markets, in my view.”