Regional Areas Increasingly Unaffordable

Regional areas have felt the affordability pinch far greater than capital cities according to the latest report by the Housing Institute of Australia (HIA).

“Housing in Australia became less affordable in the December 2020 quarter due to rising house prices and a slight fall in average incomes. Despite the decline, housing is considerably more affordable than the average over the past 20 years,” stated Angela Lillicrap, HIA’s Economist.

HIA’s Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.

“Regional areas experienced a larger decline in affordability than the capital cities. The regional index fell by 3.7 per cent in the quarter to return to the level it was in December 2019,” added Ms Lillicrap.

Ms Lillicrap also said that COVID-19 was a driving force that shifted consumer preferences in the first three quarters of 2020 with migration data showing more Australians left the capital cities during that time since records began in 2001.

“As a consequence of this shift in population, house prices in regional areas outperformed the capital cities over the past year.

“Sydney continues to be the most unaffordable market with an index reading of 66.4 in the December quarter. Melbourne is also considered an extremely unaffordable market with an index level of 77.5,” concluded Ms Lillicrap.

The HIA Housing Affordability Index for the capital cities decreased by 2.5 per cent in the December 2020 quarter, meaning affordability deteriorated. This was driven by declines in Darwin (-4.9 per cent), Brisbane (-3.1 per cent) and Adelaide (-3.1 per cent). Hobart and Perth both declined by 3.0 per cent, followed by Canberra (-2.8 per cent) and Melbourne (-1.4 per cent). Affordability in Sydney declined by 0.8 per cent. Regional areas declined by 3.7 per cent over the same period,

For years, tech entrepreneur Asher Waldfogel and his wife, Helyn MacLean, dreamed of building a modern house in Palo Alto, Calif.

The couple, however, worried about clashing with the Mediterranean-style architecture typically associated with their neighborhood of Old Palo Alto.

So they tapped architect Steven Ehrlich to create a design that paid homage to its surroundings with stucco, mahogany and titanium zinc cladding. They spent $20 million over several years building the house, completed in 2005.

Designed for indoor-outdoor living, the house has matching mahogany paneling and limestone both inside and out. Arthur Sharif/Sotheby’s International Realty

The dining room is between an outdoor garden and the staircase. Arthur Sharif/Sotheby’s International Realty

Now looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for $44 million—the most expensive listing in Palo Alto.

Waldfogel is an angel investor who co-founded Redback Networks, a telecommunications-equipment company. MacLean previously had a career in fundraising.

The kitchen and family room open to the garden and pool. Arthur Sharif/Sotheby’s International Realty

Cast alcoves and mahogany shelves house the couple’s books and ceramics. Arthur Sharif/Sotheby’s International Realty

The couple purchased the roughly 0.4-acre site for $7.1 million in 2000 and demolished a circa-1930s Spanish Colonial home. The house they built pinwheels around a central staircase. It has 7,900 square feet of livable space, with four distinct courtyards and a pool.

A key feature of the home is a cast-in-place concrete wall, or spine, that is two stories high and about 80 feet long. “There’s a little bit of controlled chaos in what comes out of the form,” unlike a perfectly uniform surface, Waldfogel said. “If you want that, you do it in plastic.”

Ehrlich said it took a few tries to get the concrete wall right. Arthur Sharif/Sotheby’s International Realty

‘It’s a really hard material to tame,’ Ehrlich said of concrete. Workers learned as they went, and Waldfogel and Helyn grew to appreciate the imperfect material. Arthur Sharif/Sotheby’s International Realty

A central staircase is housed in a glass tower. Arthur Sharif/Sotheby’s International Realty

Waldfogel said he and his wife are thinking about the next phase of life now that their daughter is grown, although they have not decided where they will move. They also have a home in Sun Valley, Idaho.

“Right now we’re just trying to emotionally let go and decide what to do next,” he said.

Arthur Sharif/Sotheby’s International Realty

Two wings of the house are connected by horizontal planes. Arthur Sharif/Sotheby’s International Realty

Palo Alto, an epicenter of venture capital and tech startups in Silicon Valley, is home to some of the country’s biggest tech titans. Sales volume and prices are rising, with a median sale price of $3.5 million for the three months ending in August, up 5.8% year-over-year, according to real-estate brokerage Redfin.

Arthur Sharif of Sotheby’s International Realty—San Francisco Brokerage has the listing.

Regional Areas Increasingly Unaffordable

Australia’s regional areas experience a sharper decline in affordability than the capital cities.

A five-bedroom Palo Alto home designed by Steven Ehrlich is listed for $44 million, making it the city’s most expensive listing. Built around a dramatic concrete spine, the home features four courtyards and a pool.