Forgotten but not Gone: The Housing Markets of Australia’s Country Towns

Presentation to The Sustainability of Australia’s Country Towns Conference

La Trobe UniversityOctober 1 2010

Professor Andrew Beer and Dr Selina TuallyHousing, Urban and Regional Environments Research Group

School of Social SciencesUniversity of Adelaide

Introduction

• Project for AHURI: Drivers of supply and demand in Australia’s rural and regional housing markets– team from Flinders University (now Adelaide University), Curtin, RMIT– 15 case studies of housing markets (all States and NT)– focus: impact of current suite of housing affordability programs

• Paper focuses on three case studies somewhat typical of country towns in Australia– Major themes of:

– Housing affordability and housing stress– Inadequate housing supply processes– Quality of housing– Relationship between housing markets, labour markets

and economic development

Introduction• 40 per cent of Australia’s population lives in rural and regional

Australia– only 4 per cent of households resident on farms

• Significant diversity in settlement types– some towns growing strongly– some stagnant– some in undeniable decline

• Significant debate around future of towns – particularly over last decade, due to:– economic and demographic change, including exodus of youth– industry restructuring and variable economic development outcomes– rationalisation of government services – seachange and treechange movements– Mining– impact of anthropogenic climate change

Housing affordability and housing stress

• On average housing stress around 8 per cent for purchasers and 20 per cent for renters– Roughly equal to metropolitan rates– Lower house prices offset by lower average incomes– Very acute in some locations e.g. mining towns and resort towns– Some places in excess of 50 percent in private rental sector

• Housing stress discourages economic growth as labour cant move to region

Housing affordability and housing stress

Table 1. Housing Stress by SLA, 2006 Census.

Proportion in housing stress

Number of SLAs

Examples

0-9.9 per cent 61 Port Headland, Roxby Downs, King Island 10-19.9 per cent 334 Wakool, Naracoorte and Lucindale, Bourke, Katanning more than 20 per cent 105 Lismore, South Gippsland, Horsham, Cowra

Source: ABS Census 2006

Inadequate Supply

• Small scale building industry with labour force shortages• Inadequate zoning of land in many places• Reluctance to consider denser housing forms or

alternative housing – community perceptions and resistance to affordable housing

• Limited investment in private rental housing• Failure of central government processes

– with exception of FHOG– limited impact of current suite of government housing

programs– sell off of government owned housing

Quality of Housing• Some centres affected by overcrowding and low housing

standards– possible impact on heath?

• Reflects history of under investment in housing stock in past in some markets– + high cost of housing construction

• Impact of access to services• Estates of older run down public housing

Relationship between housing and economy

• Housing markets and labour markets inextricably linked• Post-productivist landscapes

– generate new relationships between housing and the economy as housing per se becomes the market for goods and services• eg Apollo Bay

• Lack of affordable housing a brake on economic development in many towns

• Mining industry has generated a whole new dynamic– much greater volatility

• Failures of labour markets in some communities reflected in housing standards– including Indigenous communities

Case Study: Lismore, NSW• Population 20,000• Traditional regional centre, now with University.• Unafforable housing, because:

– regional affects with seachange migration – impact of student population– low incomes in region– Indigenous population, suffers discrimination– limited supply of land for development– limited take-up of new government initiatives including NRAS

Case Study: Zeehan and Queenstown, Tas

• Two townships on remote West Coast of Tasmania– Zeehan population: 850– Queenstown population: 2,100

• Both predominately mining communities

Case Study: ZeehanZeehan• Interesting case study in house price movements, due to:

– “Honour” of numerous exposés on town – was cheapest place in Australia for housing!• significant investor interest; anticipation of mining boom

– Recent short-lived mining revival • Avebury nickel mine• commissioned June 2008• care and maintenance in December 2008• GFC hit hard

– Mine opening and closure: sharp and immediate effect on house prices

Case Study: ZeehanZeehan• Movements from low base

– Around $10k early 2000s; to $80 k post-ACA story; then as high as $150-180k at time of mine opening; back to $100k now

– Currently: no market turnover– Investor defaults– Depressed market – business closures– Waiting game for mine opening; some whispers but nothing

confirmed• Current situation: declining town, poorly maintained

stock, lack of services and funding for services and local infrastructure

Case Study: ZeehanZeehan

Case Study: Queenstown

Queenstown• Community with long-standing history of mining.• Some of workforce lives locally, some mine workers drive-

in/drive-out – Generally male workers whose families live in more desirable

and well serviced locations on the north west coast• Housing cheap by Tasmanian and Australian standards –

many properties sub $150k– Strong house price growth across region 2003-2008 in

particular; tailing off post-GFC and with volatility in labour market and commodity markets

– Growth again from low base

Case Study: QueenstownQueenstown• Key challenges in area:

– Quality of housing for $s– Stock rapidly ageing– Poor quality of stock concerning in what is a harsh environment– Costly to build in region (30% more than Hobart at a minimum)

and limited local building capacity

Case Study: Queenstown

Queenstown

Case Study: QueenstownQueenstown• Key challenges in area:

– ‘there is lots of poor quality housing in the area that people shouldn’t be living in and then another level of housing that we cant attract people into, particularly professionals and families’ (local informant, WCC, Tas).

– Difficult to attract professional and key workers• population growth minimal• difficult to fund local services and infrastructure + maintenance backlog

extensive and expensive• exodus of families and youth from area at key transition points

– Considered afford able by government therefore no need for assistance

Case Study: Queenstown

Queenstown and Zeehan• Two other important issues raised in Zeehan and

Queenstown:– Tightening housing finance conditions– Capacity to bid for assistance programs

• resource intensive and time consuming

Case Study: Port Lincoln, SAPort Lincoln• Major regional centre on west coast of SA• 650 kilometres from Adelaide• Growing population; 2009 ERP of 14,500 people• Renown as Seafood Capital of Australia and wealthy community

Case Study: Port Lincoln, SAPort Lincoln• House price movements typical of trends in coastal SA

and Australia generally and continuing to escalate– Driven by retirement migration– Jobs growth (although this has been variable over the last 10

years – due to changes in fishing quotas etc)– Levels of housing stress in town high

• Challenging general opinion that PL is a wealthy town• Reality: significant proportion of population on low to moderate incomes

– Cost of building high due to topography (adding 30 per cent to building costs) – limiting supply of housing

– Some issues with flow of credit for housing – again highlighting risk aversion of banks

Case Study: Port Lincoln, SAKey concerns:

– Disappearance of first homeowners since changes to FHOG• + sub-$250k properties limited• lack of churn through market

– Private rental market under stress– Limited public housing and needs refurbishment– Lack of affordable housing widely acknowledged as a brake on

economic development– Town at limits

• Footprint – geography limits areas for development – Need for higher density and infill development

Transitions – drivers of change• Recognition of housing affordability crisis in rural and

regional Australia– Gillard government interest in regions – including quarantining $200 million from NRAS for rural and

regional centres

• Recognition by state governments of importance of regional communities and their housing markets as shown in Victoria– i.e. rural and regional regeneration schemes for public housing– Schemes for services in region– BUT: what will be the future of country towns in other jurisdictions?

• Long-term mining boom likely result in very different geography of settlement and housing markets

Sustainability• Some housing markets are simply not sustainable -

socially, economically, ecologically– e.g. Lismore – poor live in Lismore and work at Coast, rich live at

Coast and work in Lismore– e.g. Zeehan – fortune of housing market tied to future and

productivity of mine– e.g. Meekatharra – house prices fluctuate with mining, $25,000

in 2000; $50,000 in 2005; $30,000 in 2010– Private rental sector non-existent in some county towns and

dependant on cars (e.g. Barossa Valley)– Homeownership rates falling in some centres – affordability

Conclusion

• Governments have taken housing in country towns for granted– has generated significant challenges – for social, economic and

ecological sustainability• Some evidence that governments are paying more

attention, BUT:– still significant gaps in supply processes including in planning – + community resistance to change

Conclusion

• Housing needs to be recognised as issue of strategic importance for country towns – And, needs to be put at the forefront of actions of RDA and

other initiatives• Local government must prioritise housing and planning

for housing/land supply remains part of their core business– need to recognise impacts of climate adaptation

Further Information

Andrew BeerAndrew.beer@adelaide.edu.au

Selina TuallySelina.tually@adelaide.edu.au

Australian Housing and Urban Research Institute website (positioning paper available now)

Final report soon