Regional population growth points to increased house price pressure

Population growth adds fuel to the housing crisis and pushes property prices up, as was seen when regional real estate values soared during the pandemic flight to the countryside.

There are still more people making tree- and sea-changes than heading to the capital cities but the volume of people heading to the beach or bush has taken its biggest dip since June 2022.

The Regional Movers Index (RMI), published by the Regional Australia Institute, showed fewer city dwellers moved to regional areas during the December 2024 quarter. It fell by 11 per cent over the three-month period.

Just over 32 per cent more people moved from capital cities to regional areas than back in the opposite direction.

Migration from regional areas to the capitals, accounts for an 8.6 per cent share of all population movement. This marks the second-lowest share of regional to capital migration since Covid lockdowns were lifted three years ago, despite a 0.3 percentage point increase on the previous quarter.

Data released by the Australian Bureau of Statistics on Thursday (20 March) showed the country’s population had risen to 27.3 million, with 379,800 people added to the population from overseas migration for the year to 30 September 2024.

Beidar Cho, ABS Head of Demography, said it continued a downward growth rate trend seen in recent quarters.

“Western Australia had the fastest increase in population growth, up 2.5 per cent in the last year.

“This was followed by Victoria, which grew by 2.1 per cent, and Queensland which rose 2.0 per cent,” Ms Cho said.

Tasmania saw the least growth over the 12-month period, with a 0.3 per cent rise in population.

When it comes to movement within the country, city dwellers are increasingly flocking to regional New South Wales and Victoria.

The two south-eastern states accounted for 71 per cent of all net regional inflows in the December quarter 2024 – up from 66 per cent in the December quarter 2023.

The love national love affair with regional Queensland is cooling, with a contraction in its share of net inflows recorded in the latest December quarter to 19 per cent, down from 32 per cent in the December quarter 2023.

Regional Western Australia and South Australia accounted for a respective 4 and 3 per cent share of net inflows – up slightly on the December quarter 2023 – while Tasmania’s share increased to 3 per cent, up from a net outflow of 3 per cent.

The RMI also found that Sydneysiders continued to lead the charge into the regions, accounting for 59 per cent of net city outflows, but down from 65 per cent in the December quarter 2023.

Melbournians accounted for a 40 per cent share of net city outflows, up from 35 per cent. Perth and Brisbane also proved enticing to city and regional movers alike, recording net inflows of 5 and 2 per cent, respectively.

Queensland’s ever-popular Sunshine Coast and Gold Coast both experienced a decline in their share of net capital to regional migration.

While the Sunshine Coast remained the most popular destination for city dwellers for the eighth consecutive quarter, its 7.9 per cent share of net capital to regional migration for the 12-month period to December 2024 was well down on its 13.4 per cent share this time a year ago.

The Gold Coast accounted for 5.3 per cent of net capital to regional migration, down from 9.5 per cent in the previous 12-month period to December 2023. This came off the back of a contraction in both annual and quarterly growth of 16 and 26.6 per cent, respectively.

By contrast, Greater Geelong increased its share to 7 per cent, its largest share since December 2022, and well up on its 4.9 per cent share in the previous 12-month period.

Population growth often – but not always – translates into higher property prices.

Bunbury in Western Australia’s southwest retained its position as the fastest growing hotspot, recording a near fivefold increase in net capital to regional migration over the 12 months to December 2024

It is no coincidence that annually, Bunbury saw the highest house value growth among all WA regional centres with the median house sale price rising 28.5 per cent to $591,250.

Bendigo, long favoured by regional movers, made its debut in second place by recording a fourfold increase in net migration from capitals and the highest quarterly growth rate of the Top Five at 63.2 per cent.

Regional migration no passing trend

People migrating out of Australia’s cities to live in regional areas is a long term trend, predating the impacts of Covid by nearly a decade.

New research by the Australian Housing and Urban Research Institute (AHURI) reveals that since 2007 in every year apart from one, more people moved out of Australia’s state and territory capital cities than moved in to those cities from regional or rural areas.

Regional areas experiencing the strongest growth are those near metropolitan centres and along the coast. These areas typically have better climates, more university graduates and strong tourism sectors.

Older Australians are leading the charge.

“Our research found that the people leaving cities are typically not young people at the start of their careers, but instead are older people with more financial resources,” Professor Nicole Gurran from the University of Sydney, who led the research, said.

“They are often seeking a better lifestyle and often become homeowners in their new locations.”

The research showed that increased migration leads to a ‘knock on effect’ of higher prices—both for rents and home purchases as a result of population movements.

Rents and house purchase prices were found to increase not only in the actual locations where more people are settling, but also to have a ripple effect on other regions, both nearby and further afield.

“House prices in regions further away are impacted as low-income households are forced to move significant distances looking for housing they can afford,” Professor Gurran said.

“Importantly, with more people moving to regional areas putting pressure on housing costs, low-income renters in regional areas need support through financial help and rental relief.

“There is also a real need to increase social and emergency housing investments in regional Australia.”