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Just imagine – it’s 2030. The 54th new variant of the virus is doing the rounds, and Australia is in its 8th national lockdown. Since jobkeeper ceased in March 2021, all but the most nimble and essential small businesses have collapsed. All learning is now on Zoom. People socialise in small pods or online. The streets are largely empty except for gig economy workers delivering takeaway. The population is weary.
Yet no matter how dystopian one imagines the future to be, there is sure to be one thing that remains impervious to collapse – Australian property prices.
New data released this week leaves us in no doubt: Australian property is to pandemics what cockroaches are to nuclear war – totally indestructible.
For those wanting to break into the housing market there is now the sickening sense that while pretty much every other industry had time on its knees, the housing market is unstoppable.
And if a global pandemic – and a decline in population growth – hasn’t dented crazy house prices, then nothing will.
Prices in Australia are now at an all-time high, last month rising 0.9%, exceeding the peak reached in 2017.
But in the synapse-scrambling early days of the pandemic, there was a brief glimpse of an alternate path for the housing market.
From March to the end of the first lockdown in June, entrenched patterns (houses becoming increasingly unaffordable, good rental housing stock scarce in tourist hotspots, sea change destinations and cities) suddenly shifted.
Blink and you’d miss it but for a few short months it all seemed up for grabs. Friends who were entering the housing market suddenly found their money went further because people were panic-selling. Buy the AFR in April and you were told that housing prices might drop around 20% in 2020.
But this collapse did not come to pass.
Meanwhile, those looking to rent in cities were suddenly – and disorientingly, spoilt for choice.
From 1 March until 10 May 2020, new weekly bookings for Australian Airbnbs were down by more than 60,000.
Faced with the prospect of no income – some owners resorted to putting their properties on the private rental market. The release of new stock put downward pressure on all rents and anyone moving house at the start of lockdown was in a renters market.
Overseas students returned to their home countries and migration stopped – also freeing up supply.
But this period didn’t last. Tenants’ Union of NSW senior policy officer Leo Patterson Ross told the SMH the conversion of Airbnbs into residential tenancies was not necessarily “meaningful … with three-month leases offered by some agents a sign of optimism that the market will recover quickly.”
The whiff of disruption in the air (affordable housing!) was just that – a whiff. Masses of government stimulus, low interest rates and record household savings have all been accelerants on an already hot housing market.
Oh well, I thought, watching this unfold. At least people who can’t afford to buy in the city can move to the country.
After all, that’s what I did in 2016 when I found my meagre deposit could either get me a 45sqm box in Melbourne with one source of light and a storage cage in a building that was problematically clad – or a very charming miners cottage an hour or so outside the city.
I chose the latter, as did friends who worked in industries that were volatile, like the arts or media. A smaller mortgage provides some protection against lean years or shocks to your industry such as a pandemic or freelance work coming and going. (It is also broadly the advice of the closest thing Australia has to a national guru – the barefoot investor, Scott Pape).
But now the choice to go regional (or if you are actually from a country town, to be able to buy into your town) is rapidly vanishing. Regional house prices in Australia have risen by 7.9% as a result of the work-from-home revolution and city-dwellers wanting more space.
Particularly hot are the “lifestyle towns” – those close to the city or coast, with amenities such as good schools, cafes and restaurants.
House prices in coastal towns such as Austimer, south of Sydney, have risen 40% since the pandemic, according to one recent analysis.
JP Morgan Securities has found that regional areas are growing at more than three times the pace of capital cities.
The effects of this mass gentrification of Australia’s regions are yet to be felt, but an increase in house prices in rural areas can have significant effects on the character and vibe of a town, in the same way that gentrification has radically changed our inner-cities.
Gentrification can be the factor that breaks the chain of settlement and connection to a place, as the younger generation can no longer afford to buy close to their family. And with gentrification, essential workers and low or no income residents can be priced out, rental properties are hard to come by – and they must look further and further out if they want something affordable.
As with the many social shifts related to the pandemic, the effect on our country towns will be profound.
Source: The Guardian
Keyword: If you thought the pandemic would bring on an era of affordable housing in Australia – you were wrong | Housing