Tweed Heads listed in top ten least affordable housing markets
WE’RE used to hearing a lot about house prices to household income blowouts in our capitals — it’s almost a given — but now the problem has spread far beyond the big cities.
Housing affordability in New South Wales has become so bad that even the state’s regional city centres are ranked as some of the least affordable in the world for their residents.
According to the 13th Annual Demographia International Housing Affordability Survey, the Wingecarribee Shire region in NSW’s Southern Highlands is the 7th least affordable housing market globally. This was followed by real estate Tweed Heads, in northeastern NSW, which came in at 8th.
This was ahead of Melbourne, which was ranked as the 10th least affordable housing market. Not surprisingly Sydney was ranked 2nd, behind Hong Kong.
Wingecarribee’s “median multiple” — its median house price divided by its median income — is 9.8, according to the Demographia report. That means houses are 9.8 times its residents’ median incomes. The median house price is $650,000 and the median income is $66,500.
By comparison, the median house price in Adelaide — a capital city — is more than $200,000 less at $435,000, despite having a comparable median income of $66,000. This gives Adelaide a median multiple of 6.6.
In Tweed Heads, the median house price of $490,000 is 9.7 times the median income of $50,300. Compare this to another capital city, Brisbane, where the median house price is only slightly more at $495,000, even though its median income is substantially higher at $79,400.
In fact, the Demographia report found that 28 smaller housing markets outside of the major markets in Australia are rated “severely unaffordable”.
WHAT’S THE PROBLEM?
Andrew Beer, Dean of Research and Innovation at the University of South Australia Business School, said the factors behind growing unaffordability outside of our major cities are not dissimilar to what has happened in Sydney and Melbourne. Cashed-up Baby Boomers are buying up stock and leaving a supply drought in its wake.
“It is a real worry,” Professor Beer told news.com.au.
“It also tells us a lot about what is happening in Australian society. Wingecarribee is in the Southern Highlands of NSW, so not far outside of Sydney. And if you look at the other places they identified — such as Tweed Heads, the Gold Coast and the Sunshine Coast — it is many of the areas that are on the fringe of a metropolitan area.
“I think what is happening is you have very low income people living in these places but you also have wealthy Baby Boomers coming in and buying up the housing stock. This pushes house prices to such a high level that it is unaffordable for the local people, and that's a problem.”
And the demand is coming from both sides of the coin — older affluent buyers looking to relocate in retirement and older affluent buyers wanting a second home.
“We can’t ignore second homes as a driver as well,” Professor Beer said.
“Many people have more than one second home and some people live in them relatively rarely. It is a real phenomenon that wealthy people are taking the housing stock away from younger people.”
Tweed Heads was ranked the 8th least affordable housing market by the 13th Annual Demographia International Housing Affordability Survey.
Oliver Hartwich, Executive Director of The New Zealand Initiative, who was asked to write the foreword to this year’s Demographia International Housing Affordability Survey, said housing affordability issues arise largely from the politics of supply.
Comparing Germany’s consistently stable housing market with the unaffordable ones globally, such as Australia, he said more needs to be done to encourage and incentivise development.
“My own housing research focused on this difference: Why did Germany (and similarly Switzerland) provide housing stability where much of the Anglosphere did not?” he wrote in his introduction.
“In a nutshell, the answer to this question has a lot to do with the way councils are funded. In jurisdictions where local decision-makers stand to gain from new development, they will be much more eager to make it happen.
“In Germany and Switzerland, council budgets largely depend on their ability to attract new residents and taxpayers. This is why both countries are have traditionally had a more responsive and flexible housing supply side. The available financial incentives to planners and councillors made all the difference to house prices in the long run.”
But when it comes to adding to supply, Professor Beer said local governments in regional cities also need to overhaul planning regulations to allow for more affordable housing to be built.
“Planning regulations can be changed to make sure that there are more dwellings built that would be affordable for people on lower incomes,” he told news.com.au.
“What often happens in these places, and the Sunshine Coast can be used as an example, is that people find them very attractive destinations and move in there — whether it be for a holiday house or retirement — and then they lobby local government to change their building codes so that no more affordable housing can be built and no more high-rise housing can be built. “And that’s a real impediment on locals being able to find a place to live.”