Regional Resilience Or Regret - February 2023

By Guest Blogger, Terry Ryder, founder,

hotspotting.com.au and propertyU

The most compelling trend impacting real estate over the past five years is the one I call the Exodus to Affordable Lifestyle.

This trend has seen large numbers of people leave the biggest cities and move to smaller cities or to regional areas.

Media has been telling us that it was all caused by the Covid lockdowns but, as with so many topics, they’ve got this one wrong.

This core population trend has been happening for many years. The official population data shows that Sydney has been losing population to other parts of Australia for the past 10 years and Melbourne has been losing to internal migration for the past five or six years.

The Covid lockdown period made all this more visible and gave it extra momentum, but it certainly wasn’t caused by the pandemic.

Fundamentally this big migration of population has been caused by the pursuit of lifestyle and affordability, enabled by technology – which means, the ability to work remotely.

Australians have been relocating in big numbers and the most popular destinations have been Queensland and Western Australia, with Queensland No.1 by a big margin.

The latest population data from the ABS shows that, in terms of net interstate migration, New South Wales had a net loss of 43,451 in FY2022 and Victoria a net loss of 17,233 (both states still had solid population growth, however, thanks to overseas migration and natural increase).

The big winner from this was Queensland, which gained 55,418 residents from net interstate migration - and more from overseas migration. Queensland has been the nation’s population growth leader for the past three years.

Western Australia and South Australia have also made solid population gains in recent years.

Now, because so many commentators have misunderstood the trend and labelled it a reaction to Covid lockdowns, their theory now is that everyone will move back to the big cities now that the pandemic, allegedly, has been dealt with.

There’s no statistical evidence that this is happening and I certainly don’t expect it to happen.

Apart from anything else, the notion that families which decided to sell their homes, uproot their lives and relocate themselves and their kids to another part of Australia, will casually decide to uproot again and move back – is unrealistic.

While there was an expectation – or perhaps a hope – in commercial property circles that workers would return to the big city CBDs, the latest office space report from the Property Council of Australia, published in February 2023, indicates that this has not occurred and CBD vacancies have continued to rise.

The office vacancy rate (as at January 2023) now sits at 13.3%, the highest rate since the mid-1990s and an increase of 0.4% since July 2022.

Australians continue to leave the two biggest cities and head north or west.

Australians are still heading to places that offer lifestyle at prices that are affordable compared to Melbourne, Sydney and Canberra, which are all places where median house prices range from $900,000 to $1,200,000 – even after some price decline recently.

The result for regional property markets has been extraordinary, leading to strong demand and price growth in many areas.

Indeed, the regions overall have been out-performing the capital cities on price for the past five years, thanks to this compelling trend.

And now, at a time when some markets are declining from the boom-time peak levels, the regional markets overall are showing the strongest resistance to the downturn trend. Smaller capital cities like Adelaide and Perth are also holding up well against the downturn forces.

So I believe the Exodus to Affordable Lifestyle trend will continue.

What we will see change is not a move away from the Exodus trend but perhaps a focus on different types of locations and regions.

In the past few years, the focus has really been on coastal locations but many of those are no longer affordable.

We have seen phenomenal growth in prices in seaside hotspots like Byron Bay, the Gold Coast, the Sunshine Coast, the Central Coast in NSW and the Mornington Peninsula on the southern fringe of Melbourne.

Instead, I see people making a “hill change” rather than a “sea change”, focusing on the same motivations such as affordability and lifestyle, but in more of a hinterland or country setting.

In terms of sales activity, we’ve seen evidence of this.

Queensland has many good options, including Toowoomba, Rockhampton and the Sunshine Coast Hinterland.

In Victoria there is still quite a good level of affordability in major centres within one or two hours of Melbourne.

Locations such as Ballarat and Bendigo continue to perform well as property markets, as do the hill change towns north the Victorian capital.

New South Wales locations I expect to do well include Tamworth, Queanbeyan and Wagga Wagga.

Buying in a strong regional centre can represent a win-win-win situation for investors: cheaper prices, higher rental yields and good potential for price growth.

It’s still important though to choose the location well and ensure there is a strong and diverse economy creating new jobs, good transport links and a good level of infrastructure spending, as well as affordable housing and an attractive lifestyle.

In regional locations that can offer all of that, the Exodus to Affordable Lifestyle trend remains very much alive and kicking goals.

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