The great Australian dream of home ownership is fundamentally changing. Explosive growth in house prices is far outstripping wage growth in Melbourne and Sydney, putting home ownership in these cities out of reach for many people, particularly younger and lower income households. As they search for their slice of the ‘Australian Dream’, Melburnians are confronted with two contrasting options: inner city apartment living, or low-density housing on the urban fringe. In choosing one or the other, either ‘up or out’, households make trade-offs between higher-density living in close proximity to amenity but with less ‘space’ to call their own, or larger dwellings with more space but access to less employment opportunities and amenities. A renewed focus on the economic development of Victoria’s regional cities presents a third option. Regional growth can assist with absorbing some of Melbourne’s growth pressures, while providing real liveability alternatives for residents. Liveability of regional cities vs outer Melbourne Liveability means different things to different people, but at its heart is a desire to work and play in close proximity to where you live. Using empirical data, we modelled liveability outcomes across five themes of Human Capital, Physical Capital, Health & Safety, Natural Amenity and Local Amenities for each Melbourne local government area (LGA) and the three larger regional cities of Geelong, Ballarat and Bendigo. We then consolidated the outcomes into a single ‘Liveability Score’ for each LGA and regional city. (Figure 1). Figure 1 – Liveability themes All regional cities play a critical role in a ‘third option’, assisting to alleviate the growth pressures of Melbourne and contribute to the economic prosperity of regional Victoria. For the purpose of this article, our focus is on our three largest regional cities of Geelong, Ballarat and Bendigo. The liveability of these large regional cities compares positively against Greater Melbourne (Figure 2 and Figure 3), and when considering the large regional cities as a single consolidated option, the three regional cities perform better on liveability than two-thirds of all Melbourne LGAs. Figure 2 – Liveability – Regional Cities vs Greater Melbourne vs Outer Melbourne Source: Deloitte Access Economics A range of factors drive liveability in our three largest regional cities. All three regional cities are key health service hubs for the broader regional population and each city is anchored by major teaching hospitals supported by strong primary health service provision. The larger regional cities each have a rich history and cultural heritage, supported by strong arts and recreational amenities. The regional cities also provide residents with a high quality retail, eating, and entertainment offering on par with many areas of Melbourne. Each city is home to a range of higher educational institutions, providing residents with access to leading tertiary education and skills development options. The presence of these educational institutions also supports regional industry research and development, collaboration and innovation. An excellent example is the Advanced Fibre Cluster in Geelong, underpinned by Deakin University and private partners. The larger regional cities are well supported and connected to critical physical economic infrastructure, including rail, roads, airport access, internet and mobile coverage. In particular, the regional cities have excellent road and rail connectivity to the rest of the state and Melbourne. Liveability and the ‘price of entry’ While regional cities make a persuasive ‘liveability’ case for many Melbourne residents, the argument becomes even more compelling when considered within the context of housing affordability. Map x below illustrates median house prices across Victoria, while Figure Y overleaf compares each Council’s liveability ranking, to its median house price. Map 1: Median house price by suburb, 2017 Data source: Valuer General of Victoria. Figure 3: Liveability rank and median house price, by Council Note: LGA averages presented in chart are the population weighted aggregate of suburb house prices up to LGA The larger regional cities provide huge liveability ‘bang for their buck’ relative to Melbourne LGAs. For example, the next closest in price to the regional cities average ($435,000) would be in Cardinia ($519,000), a whole 13 places lower in the liveability rankings. Where to next? Victorian regional cities have substantial liveability credentials and offer a compelling ‘third option’ to residents of Melbourne. As the recent Select Committee on Regional Development and Decentralisation puts it, “To live five to ten minutes from work, to own your own home, to have space for children to live grow and play, these are the benefits our regions have over our capitals”. Regional city population growth, as part of a renewed emphasis on regional Victorian economic development and prosperity, should form a key pillar of any integrated planning strategy for Victoria’s population and economic future. Promotion of long-term regional growth will require an integrated response from all levels of government, supported private sector and household investment. Deloitte is proud to be involved in the conversation about Victoria’s future and sharing our thinking on how we can maintain excellent liveability while growing our population. We’re excited to lead a discussion with businesses, individuals and governments on the things we need to get right to make that happen in each of the key sectors of the Victorian economy during the next phase of our project. We look forward to hearing from you and your community on what we need to start, what we must stop and the things we should continue to make Victoria the very best it can be #itshappeningvictoria To find out more please visit www.deloitte.com/au/itshappening Supporting Footnotes Home ownership rates for people aged 18-39 have dropped by 10.5% between 2002 and 2014. See https://www.therealestateconversation.com.au/2017/08/03/hilda-report-puts-declining-rates-home-ownership-young-australians-clear-view/1501711603 See urban sprawl article for more details Equally weighting across each of the 5 themes Defined as Local Government Area (LGA) boundaries per the 2016 ASGS. Outside of this article, Deloitte has conducted analysis for the 10 regional cities that comprise Regional Cities Victoria (RCV). See for example UTS commentary on Deloitte ImagineSydney research Ppiii, Parliament of the Commonwealth of Australia, “Regions at the ready: Investing in Australia’s Future”.