New research by the Australian Housing and Urban Research Institute (AHURI) found that an increase in demand for rentals in regional property markets could see landlords increasingly shun lower income renters.

The research, 'Pathways to regional housing recovery from COVID-19' analyses the consequences of the pandemic for households in regional Australia, using Tasmania as a case study.

The report suggests an increase in demand for regional rental properties could be because of lower investor confidence in the wake of fewer incentives to invest in property, increased numbers of tenants who owe arrears, policy which has protected tenants, and lower housing demand from migrants.

"There is a risk that landlords may shape future risk mitigation strategies in ways that further exclude renting to lower income tenants because they perceive these groups to present a greater risk to rental revenue," said the lead author of AHURI's report, Dr Julia Verdouw from the University of Tasmania.

"This housing demand, most likely due to regional living being perceived as ‘safer’ than cities in a pandemic, is putting upward pressure on dwelling prices while lowering vacancy rates and reducing affordability in regional Australia.

"In fact, while values in cities decelerated as a result of the COVID-19 crisis, regional values have been growing at 5% per annum, surpassing the growth rate in cities."

Regional property markets have been booming over COVID, with house prices in the regions increasing in value more than capital cities.

The combined five capital cities' dwelling prices index decreased by 1.45% compared to 3.77% in 'rest of state' regions by the end of November 2020, according to CoreLogic.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
5.69% p.a.
6.16% p.a.
$2,319
Principal & Interest
Fixed
$0
$530
90%
Featured
  • Available for purchase or refinance. 90% LVR
  • Fast turnaround times. Can meet 30-day settlement
  • No monthly or ongoing fees, split with low-rate variable loan
Disclosure
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
Featured Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Disclosure
6.09% p.a.
6.11% p.a.
$2,421
Principal & Interest
Variable
$0
$250
60%
Featured
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely – Access your additional payments when you need them
  • Home loan specialists available today
Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

The report said regional areas generally have higher higher levels of socio-economic disadvantage, including lower incomes, higher unemployment rates, and more reliance on small business or industries with rates of casualised and part-time work.

According to AHURI, there is also a "critical shortage" of affordable rentals near jobs for lower income workers.

The report said the winding back of JobKeeper and JobSeeker, which buffered the effects of job and income losses, will expose lower income renters who rely on income support to further housing risk in regional areas.

Recent research found JobSeeker recipients are spending as much as 69% of their income on rent, putting them squarely under the threshold for extreme rental stress.

"In Tasmania, where employment is disproportionately reliant on industries significantly affected by COVID-19, such as the tourism and hospitality sector, increases in income support masked pre-existing levels of poverty in the community," Dr Verdouw said. 

The report calls on the federal government to maintain targeted income protection, build employment and income security, and expand access to affordable housing by investing in more social housing and rolling out financial support for households in housing stress. 

"For populations in regional areas to grow and thrive, Australian policy makers need a big picture, long-term perspective: untethered to political cycles, and demonstrating a deep political commitment to reducing regional and rural poverty and narrowing wealth inequality in Australia," the report said.

Read more: What's in store for struggling renters in 2021?

Photo by Finn on Unsplash





Ready, Set, Buy!


Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

By subscribing you agree to our privacy policy