Housing affordability in regional Australia experienced a sharper drop compared to its capital cities ever since the pandemic began, according to the latest Housing Industry Association (HIA) Affordability Index.
Across the regions, housing affordability in New South Wales went down by -22.8%, followed by Tasmania at -13.6%, Queensland at -10.3%, Northern Territory at -8.6%, South Australia at -8.1% and Victoria at -6.5%.
In comparison, Melbourne and Sydney saw a decline of just -3.8% and -3.3% respectively.
Other capital cities with the most significant deterioration include Hobart at -18.7%, Darwin at -13%, Canberra at -10.2%, Adelaide at -8.7%, Brisbane at -6.3% and Perth at -5.5%.
The index was calculated for each of the eight capital cities and regional areas every quarter and took the latest dwelling prices, mortgage interest rates and wage developments into account.
“Housing affordability has deteriorated over the past year as house prices rose faster than the capacity of the typical household to repay a mortgage,” said Tom Devitt, an economist at HIA.
In the past two decades, housing affordability was the most challenging in Melbourne and Sydney, Devitt said. However, the rest of the country followed suit in the post-pandemic era.
Devitt said this outcome was “not surprising” given the rapid outflow of population from capital cities in the past year.
“The number of people who left Sydney and Melbourne was tens of thousands more than the number of people who arrived. This is not unusual for Sydney but was a uniquely damaging development for Melbourne,” Devitt said.
The closure of international borders was also to blame for the lack of overseas migrant and tourist arrivals. Still, Melbourne and Sydney were not as affected as their regional counterparts.
Despite this regional deterioration, Devitt claimed that housing is still more affordable than it was 20 years ago given today’s record-low interest rates.
