By George Housakos, Managing Director, Integrated Infrastructure, Real Estate Advisory, PwC Australia
Australia’s housing crisis is not confined to capital cities. In regional areas, housing stress is just as urgent and damaging, hurting individuals and communities, and biting businesses by intensifying a critical shortage of labour and skills. Resolving it will not be easy, but it is time to dial up the effort and pace.
Australia has one of the most urbanised populations in the world, with more than 65 per cent of Australians living in capital cities. To support further growth of the population and the economy, our regional areas can and should play a greater role. The pandemic has proved remote work is possible and here to stay. If Australia’s regional cities absorbed more of the nation’s growth, it could relieve pressure on housing affordability, diversify the economy, reduce congestion, and improve the quality of life for many Australians.
The national rental vacancy rate is hovering around 1 per cent across the country, and the regional rental vacancy rate is 0.7%. Simply, this translates to insufficient new houses being built for people to rent or purchase.
The reality for those on moderate or low incomes who live in the regions is that housing is increasingly unaffordable and unavailable. Housing stress and homelessness are proven to have serious consequences for mental and physical health, and for employment and education. At the same time, regional housing pressures can lead to shortages of the workers who provide key social and health services – such as doctors, nurses, psychologists, allied health workers, teachers, social workers and the many other people who provide the diverse range of social and physical activities that underpin a healthy, connected community.
Regional businesses, too, are being hurt by the housing crisis, with crippling shortages of personnel and intense competition to attract and retain workers. Enticing workers is challenging because the options for short-term or long-term accommodation are limited and under extreme demand. With insufficient rental availability, people don’t have the chance to ‘try out’ a new area before committing to buying a house, nor to rent while building a new home. The lack of skilled and unskilled workers is making it very difficult for many regional businesses to optimise their assets, let alone grow.
The current regional housing model is not working and this is limiting the potential of regional Australia. In many regional locations around Australia, the housing supply model is inefficient, with a small number of developers, high delivery costs and timeframes, and limited opportunities for economies of scale.
Natural disasters have amplified the problem, with homes and infrastructure being impacted in all parts of the country. COVID-19 has left its mark too, with a new demographic of former city workers migrating to the regions to work remotely, while supply has also receded with former long-term rental homes being offered as short-term holiday rentals instead.
The broken model of regional housing is having real impacts on the ground, for individuals, communities and businesses.
The national housing challenge is genuinely difficult, and it needs strategic thinking and structural responses. Regional housing has extra challenges, with very diverse communities, environments and histories across the country’s many local government areas, as well as challenges relating to housing delivery at scale and the availability of skilled workers. This makes regional housing a problem that cannot be fixed by federal, state or local governments alone, and that won’t be resolved overnight.
The Federal Government is standing by its election commitment to arrest the housing crisis by expanding the remit of the National Housing Finance and Investment Corporation (NHFIC), which is to be reborn as Housing Australia. In its election commitment, the government announced that the name change to Housing Australia will be far more than cosmetic. The role of Housing Australia will be expanded to include delivery of new housing programs (including the Regional Home Guarantee Scheme, which has already been launched). The new and expanded Housing Australia offers a generational opportunity to help resolve the housing crisis, and to provide the greater leadership and coordination needed in the sector.
Additionally, announced at the Federal Budget in October was the National Housing Accord. The National Housing Accord will seek to align the efforts of all levels of government, institutional investors and the construction sector to help tackle the nation’s housing problem. It has an ambition to build one million new homes over five years from 2024.
Housing Australia has funding commitments, a track record and expertise in delivering innovative solutions, and deep connections into the market, so it is well placed to be a driving force to provide additional regional housing.
So far, the responses by the Federal Government are steps in the right direction – but just that. It would be rash to assume that the task is complete and these programs will simply work and resolve the national housing crisis. Australia is at a pivotal junction – will these programs deliver some housing and then dissipate, or will the reborn Housing Australia be a turning point in the housing landscape by rising to its potential to implement government policies and transform the housing landscape in Australia?
Successfully tackling the housing crisis will deliver safe, stable, adequate and affordable housing for all Australians, including in remote and regional communities. If we can resolve the regional housing challenge, the benefits will be substantial and long-lasting for the health and wellbeing of regional communities, for thriving rural and regional businesses, and for a stronger national economy.
This sponsored editorial was brought to you by PwC. For more information, please visit pwc.com.au.
