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Move To The Country They Say But What About This Regional Housing Affordability Crisis

It’s been difficult to miss at least some elements of the landmark multi-million dollar Move to More campaign.

The federal government initiative aims to raise awareness and motivate city folk to explore opportunities to live, work and invest in regional towns and cities.

You may have seen the billboards, or ads on bus shelters, radio, television and digital. 

The campaign has inspired many urbanites who can work from home to move to regional towns.

But many have made the move and discovered rental prices and house sale prices rival those of the bigger cities.

The regional rental crisis

When it comes to affordable access to decent rental options in many of Australia’s regional and rural areas, the struggle is real.

According to the 2021 Census, around 30% of all households rent their homes within the private rental market – a percentage that has risen in the last few decades.

In regional areas, private rental properties total about one-quarter of all rental properties. Around 10% of all households rent their home in a regional location. 

Regional rents vs city rents

Many factors contribute to increasing rental prices.

In regional areas, these include developments in population flows and vacancy rates.

Changing preferences also cause price hikes. In the early days of COVID-19, rental properties in inner-city locations fell out of favour as international students flew home, and many young people returned to live with parents. Overseas migration also ground to a halt.

People who were already living in regional areas, away from strict lockdown limitations tended to stay put, or moved to other lockdown-free regions.

And for those enduring lockdowns in densely populated areas, the wide open spaces of regional Australia were incredibly enticing.

The resulting rental inflation saw regional rents skyrocket compared to those in capital cities.

To compare between Melbourne and regional Victoria, the March quarter 2023 Rental Report shows the median rent increased by $20 in metropolitan Melbourne (to $480 per week). Regional Victoria experienced an identical $20 increase, pushing the median rents to $420 per week.

For a closer analysis, the Melbourne Rent Index (MRI) increased by 5.2% in the March 2023 quarter, and a total of 14.6% in the 12 months prior. That’s the highest annual increase since this Rental Report series launched back in 2000.

Meanwhile, the Regional Rent Index (RRI) jumped 2.2% in the March quarter 2023, with the 12 months to March 2023 increasing by 6.3%.

This was a slight dip from the pandemic’s influence in the 12 months to March 2022 (10.1%), but more than the long-term average annual increase (4.2%) over the past decade.

Rental trends – March quarter 2023

Median weekly rent is based on all new rental lettings for the quarter.

Quarterly and Annual percentage change is calculated from the relevant Rent Indices, not median weekly rents.

Is the regional rental crisis over?

SQM Research, based on the strength of data that shows national residential property rental vacancy rates rose to 1.1 per cent in March 2023, says Australia’s rental crisis has “peaked” across regional areas.

To support its claim, the report shows vacancy rates in North Coast NSW rose to 1.6% from 1.4% in February. In the Blue Mountains, vacancy rates rose to 2%, the highest vacancy rate in the region since early 2020.

On the Gold Coast, the data shows, rental vacancy rates are also climbing again, with the current 1.1% measure the highest since October 2021.

The rising vacancy rates could reflect more employees moving back to work in city offices. It also reflects the efforts of those who tried regional living and decided they weren't up for it.

Mudgee locals told ABC they are being forced to leave their home town as median rents increased by 45% in the past five years.

Mudgee has become quite the drawcard for regional tourism, being named Australia's Top Tourism Town in 2021 and 2022. This attraction to Mudgee has led to soaring median rent prices.

Since 2018 it's gone from $370 per week to $540 per week, prompting some third and fourth generation Mudgee locals to leave the region because they can no longer afford to live there.

And in Dubbo, large mining projects have increased the population and added a further squeeze on housing demand that has pushed both rental prices and sale prices up around 8%.

The bottom line

Depending on who you ask and which billboard ad you choose to believe, moving to regional Australia could be the best of times, or the worst of times. And those times are still a-changin’.

If you can work from home, and earn city dollars, there’s little doubt that house prices in regional centres will give you more brick for your buck, as well as more lovely land to roam around on. But will regional real estate value as the goal posts marking the new normal continue to shift? That’s one to watch and wait on …

Go deeper: Postcode restrictions and home loans

Financial disclaimer

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.