Australians ditch inner city lifestyle for the more laidback regional centres around the country

Posted On Monday, 25 January 2016 12:26 Published by
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With house prices in most capital cities becoming beyond the reach of many, a growing number of Australians are deciding to ditch the inner city lifestyle for the more laidback regional centres around the country. 

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ABS regional internal migration estimates highlight some interesting trends about where Australians are moving to. With the lion’s share of overseas migrants heading to the major capital cities and in particular Sydney and Melbourne, Australians are once again embracing the tree/sea change lifestyle.

Several factors have contributed to the gaining rise in city dwellers moving to regional areas, however none more so than affordability. With the median house price in Sydney nudging the AUD$1m mark and Melbourne not too far behind at AUD$730,000 (Residex, September 2015), affordability levels have diminished, particularly against a backdrop of weak wage growth. Instead of a significant mortgage or the prospect of long term renting in the city, people have turned to major regional centres.

Over the five years to June 2014 (latest available data), an average of almost 15,000 people net per annum left Australia’s capital cities for regional areas. Over this period, the largest outbound movement came from Sydney (average of 19,257 persons net per annum leaving), while regional NSW experienced the largest inflow (gaining an average of 6,824 persons net per annum), most notably to coastal locations such as Port Macquarie and Shoalhaven.

Over the five year period, Perth and Brisbane were the only capital cities to record an internal migration gain (see Figure 1), reflective of strong employment gains recorded for the period, underpinned by professional services associated with mining construction.

A recent softening in labour market conditions (particularly in Greater Perth) is likely to have stemmed the inflow of internal migrants to these cities while at the same time constraining property market conditions. Alternatively, buoyed net overseas migration has more than offset the decline in internal migration to all capital cities.

By age, the attraction of capital cities due to tertiary education, employment opportunities and the ‘bright lights’ has ensured strong growth of young adults in their late teens and twenties. On average, 13,000 people net per annum aged between 15-24 moved to one of Australia’s capital cities.

However for other age cohorts, particularly the dominant family (0-14 and 45-64) and retiree cohorts (65+), the outbound movement to regional locations has been extensive (see Figure 2) at 18,505 and 2,685 persons per annum respectively (net).

So what does this mean for property markets? With migration rates acting as a reasonable proxy for housing demand, the pick up in internal migration outside of our capital cities is likely to bode well for regional property markets and economies. Housing construction which stems from population growth provides a significant boost to the local economy through employment and demand for goods and services.

Looking ahead, further internal migration to regional Australia appears likely, underpinned by retiree households looking to downsize comfortably from the sale of the family home. Recent house price growth in the capital cities should enable a sizeable surplus of funds to assist with retirement providing impetus to relocate.

Similarly, with a growing number of younger persons looking to attend university or undertake higher education, the outflow of young adults in regional areas to Australian capital cities is expected to persist.

For the capital cities, the continued strong inflow of net overseas migration, particularly to Sydney and Melbourne will continue to support house price growth, albeit at a more moderate pace. 

Last modified on Monday, 25 January 2016 13:32

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