Will a housing shortage close the COVID window of opportunity for regions?

“… the very time when the regional drift to the cities has faltered, for those wanting to go the other way and move beyond the metros, the barriers have only become more formidable”.

For most Australians living in the cities the thought of moving to the regions is not something to be entertained – at least during the working and family formation years.

But in the disruption of the COVID pandemic a ‘tree’ and ‘sea-change’ move away from the cities to regional centres has become discernible nationally.

COVID has presented a window of opportunity for many Australians to see their own country either as tourists or as economic migrants.

It’s not a mass exodus, but the opportunity is being taken by a growing number of working age Australians to capitalise on soaring city property prices and swap traffic congestion and commuting for life in a regional setting.

As a social phenomenon, a move away from the cities has a long way to go to challenge the dominant Australian narrative – but as has been the case with record domestic tourism, COVID has at least opened the window.

Last month in The Australian (8 Sept 2021) demographer Bernard Salt pointed to a 50-year trend in many parts where people had quietly left the country to pursue opportunities in the cities or along the coast[i].

The exceptions, he wrote, were the so-called “Goldilocks” growth zones within 150 kilometres commuting distance of major metro centres.

There in places like the Sunshine Coast, Bunbury, Ballarat, and the central coast of NSW, the population is growing and complex communities are forming.

For the remaining parts of the continent, especially the inland areas, those regions that are primarily rural, mining or outback – undeniably the long-term demographic trend has been one of depopulation.

Ironically though, at the very time when the regional drift to the cities has faltered, for those wanting to go the other way and move beyond the metros, the barriers have only become more formidable.

This when in relatively buoyant regional economies, labour and skills shortages are slowing a range of development and new business investments.

The impact is national and as a new report from Infrastructure Australia warns, the situation is only going to get worse over the next few years[ii].

At the end of March 2021, Queensland’s population was nearly 5.25 million with just over 44,000 arrivals from interstate during the previous year making up the biggest component of the increase.

The challenge for Queensland’s regions right now is not one of de-population, rather it is finding ways to support re-population by making it easier for those who actually want to move from the cities for regional work.

Regional employers cannot get people with relevant skills to fill the vacancies that exist, and if they can find willing applicants, a shortage of housing is so universal, they find it almost impossible to accommodate them.

It’s a double whammy that is compounding the human capital drought in the bush and along the coast.

Traditionally, regional economies have resorted to four broad strategies for filling employment needs starting with the organic option of training locals for future needs.

When that option is not practical the next step has been to develop and diversify the skills base by bringing in people from other regions to work and preferably live locally.

But given the reluctance of urban Australians to move out of the cities, for several decades the crucial shortfalls in key trades and professional have been met largely by skilled migrants from overseas.

To meet the seasonal demand for low-entry skills jobs like fruit and vegetable picking or seasonal tourism/hospitality work, regional communities have been able to host special visa groups like backpackers and South Pacific islanders.

These strategies worked well when upwards of 300,000 migrants, mostly skilled, were coming to Australia every year and when there were no lock-downs or border blockages inhibiting the mobility of people seeking work or filling jobs.

But with the national borders shut, in the 12 months to September 2021 the ABS reported Australian net overseas migration was actually negative -95,300[iii].

A complicating and offsetting factor in the human capital formula has been the mass return of Australian expatriates just when record low interest rates boosted housing affordability and pushed prices up.

Since COVID first struck back in March 2020, DFAT reports more than 450,000 Australian expats have returned to their homeland.

No wonder there has been a real estate boom – so many people wanting accommodation, interest rates going through the floor, and new housing development stifled by lock-downs and constricted supply chains.

The upshot of a conflation of all these factors has been a competition for housing, particularly in centres outside the capital cities, that over the past year saw regional property prices (up 22%) increased more than in the big cities (up 18%)[iv].

The boom in housing prices (and by implication rents) has embraced all regions, including the Outback, creating there the conundrum of a housing shortage and declining population.

In Longreach, for example, in Central Western Queensland, real estate prices have increased by more than 35% over the past year to a median price per house of $220,000.

Toowoomba’s 12-month price climb is even steeper with the median price up 41% to $418,000.

These rates inland are matched or even exceeded right along the Queensland coastline all the way up to Port Douglas where the median price of houses selling are up 30% to $830,000. [v] 

The pressure on housing was evident before the end of 2020 when figures from the Real Estate Institute of Queensland showed that for every 10,000 rental properties only 57 were seeking tenants.

This trend of record of low rental vacancies has continued throughout 2021 and many properties that were previously available for rental have either been bought by interstate property speculators or tree-changers seeking to get away from the city.

During a late August 2021 visit to the South Burnett, I heard anecdotally that across the district (not much more than 150 kilometres from Brisbane) there were 100 fewer rental properties available than there had been the same time 12 months earlier.

At the same time the average number of days on the market for houses around the Kingaroy region has dropped by 58% to 53 days[vi].

The situation is just as desperate over in Dalby where again anecdotally I’ve heard there are just a couple of rental properties available.

In the Toowoomba-Surat Basin region most of the skilled jobs are being filled by FIFO and DIDO workers from the coast.

Paradoxically, in these same regions skills and labour shortages are the daily challenges of employers, while significant numbers of local people, especially young people, remain unemployed – but at least they are housed.

In short, there is a mismatch between the needs of the economy and the capacity of local communities to fill the skilled jobs on offer.

It means that a multi-pronged strategy that goes well beyond skills and training is needed to end the human capital drought in the regions.

As the COVID lifts with vaccination and the opening of borders, initially there is likely to be a massive increase in FIFO and DIDO workers and the airlines will be the big winners.

On the ground, however, if the regions are to be home to workers, then the housing shortage must be addressed with a raft of measures encouraging construction and renovation of accommodation.

Regional development will not be sustainable if it’s housing strategy amounts to no more than providing dongas for FIFO and DIDO workers.

On this issue, there is scope for public-private partnerships as well as Federal and State taxation incentives focussed on the regions.

Tangible incentives could range from augmenting first home buyer grants to regional newcomers, accelerated depreciation for new housing, and payroll relief for developers and construction companies investing in housing infrastructure.

The Queensland Government should look at replacing and upgrading existing public service accommodation in the regions enabling the sale of a major housing portfolio to newcomers wishing to live and work locally.

As we have seen too in Quilpie recently, local government can get in on the act too by providing local facility including land and development assistance.

In many parts of country Queensland local government is already a partner with local community groups in providing social housing.

The Commonwealth and State Governments would do well to see how they might assist the expansion of such initiatives resulting in more housing on the ground.

Like with most public policy dilemmas, solutions to the regional human capital drought don’t require rocket science in the answer.

Much can be done initially by government departments proactively engaging and working outside their silos, making sure that various relevant programs are joined up – across the different levels and between agencies.

Common-sense approaches and proactive engagement with stakeholders on the ground, resulting in close connection of programs and the communities and people they are design to assist – these are starting points.

If we do that, the window of awareness and opportunity provided by COVID might in fact mean that regional development gets beyond FIFO and DIDO to more Australians actually living and working in the regions.

[i] https://www.theaustralian.com.au/business/property/australians-on-the-move-in-search-of-opportunities/news-story/91b709ad57b4751486047e80169f2bf6#&gid=null&pid=1

[ii] https://www.infrastructureaustralia.gov.au/infrastructure-workforce-skills-supply

[iii] Australian Bureau of Statistics release, 16 September 2021

[iv] https://www.abc.net.au/news/2021-09-01/property-housing-corelogic-house-prices-rise/100423896

[v] https://www.realestate.com.au/news/property-boom-leads-to-huge-price-growth-across-regional-qld/

[vi] https://www.realestate.com.au/news/days-on-market-shrinks-across-regional-qld-property-markets/

Author: Professor John Cole OAM

Professor Emeritus and founder of the Institute for Resilient Regions at the University of Southern Queensland and Honorary Professor, UQ Business School, The University of Queensland.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: