Inner suburbs outperform for growth: RBA
House prices in the inner suburbs grew at a greater pace, in recent years, than areas further afield, according to the Reserve Bank of Australia.
The Head of the RBA’s Financial Stability Department, Luci Ellis, said the trade-off between the “space” offered by suburban living vs the “place” advantages of central city living has grown “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, citing a decrease in the job-to-worker ratio in many outer areas and increasing traffic.
“Inner-ring properties have, if anything, become more expensive relative to outer-ring properties in recent years. And the larger the city, the greater is that premium,” she said, referencing data for detached houses between 2006 and 2013. Jobs are congregating in existing centres, instead of suburban or regional areas, so it was not always feasible for people to move away to get lower property prices, Luci said in a recent speech to the CITI Residential Housing Conference in Sydney.
“Individual decisions, and government policies over many years, have given us comparatively low-density cities that create large premiums for the most convenient districts,” she said. “I am hopeful that, over time, Australia’s urban structure can evolve to offer better choices and greater financial stability." RentCover General Manager Sharon Fox-Slater said that centrally located houses came with price tags beyond the reach of many investors.
“This doesn’t mean that lower-income investors are disadvantaged. We see investors do very well using a range of strategies and buying in a wide variety of settings,” she said.