Demand for inner-city housing is likely to surge in the future, while regional areas and outer suburbs will attract ever fewer buyers, according to a leading economist at the Reserve Bank of Australia (RBA).
RBA head of financial stability Luci Ellis said jobs were becoming increasingly centralised around CBD areas, making regional centres less and less of a viable option for workers.
“In fact, many of the inner areas have become even greater job magnets in recent years; some middle and outer areas added people, but not so many jobs, so their job-to-worker ratios actually declined,” she said in a speech to the CITI Residential Housing Conference.
Ms Ellis believes declining job availability means residents in outer suburbs or regional areas will face longer commutes and a less desirable lifestyle.
“The trade-off between space and place is getting steeper. Locating on the fringe is relatively less attractive than it used to be, and not only because the fringe is moving further out,” she said.
According to RBA data, the gap between prices in the inner ring and the outer suburbs is widening as desirability pushes up prices.
These trends are especially evident in regional areas, where few employers are based.
“With the possible exceptions of Newcastle, Geelong and maybe Bendigo and Ballarat, few centres outside the state capitals have many corporate headquarters or other job magnets,” she said.
“These self-sustaining job magnets seem to be necessary to create the variety of job opportunities that would attract large numbers of former city dwellers.”
An analysis by RP Data of compound annual price change over the past 20 years seems to bear out this theory.
With the exception of Miles and Chinchilla, all the suburbs with the strongest growth over the long term were in blue-chip, inner-city areas, according to RP Data research analyst Cameron Kusher.
“With the population continuing to grow and housing supply insufficient, we would expect that inner-city houses will continue to be the best performing over the long term, with significant demand and a short supply available,” Mr Kusher said.