According to new research released today by the National Housing Finance and Investment Corporation (NHFIC), annual rental growth in regional Australia has peaked and is dropping – fast in certain locations – indicating that the pandemic-induced migration between cities and regions is winding down.
This shows that some of the internal migratory patterns and behaviours identified during COVID-19 are winding down, NHFIC said. Annual rental growth in regional Victoria, for example, has been reduced by half to 6 per cent in 2021, while in regional NSW it has dropped from 12 per cent to 7 per cent.
“Australia’s rental markets have been experiencing a highly synchronised period of strong demand, and this is likely to continue with the return of migrants following the pandemic,” NHFIC Head of Research Hugh Hartigan said.
“But it appears that the highly acute rental pressures that built up in regional markets are beginning to subside as migration patterns normalise.”
Regional Australia gained 184,000 inhabitants in the five years leading up to the 2021 Census (up from 81,600 in 2016).
This was mostly due to persons relocating to QLD (+63,700), VIC (+62,900), and NSW (+59,000), which offset the small net losses from the WA (-9,000) and NT (-3,800).
Positive net migration was highest in Sunshine Coast, Gold Coast, and Geelong. Over the previous three censuses (2011, 2016, 2021), the Sunshine Coast and Gold Coast have been in the top three areas for positive net internal migration, while Geelong has ranked in the top three for the past two (2016, 2021).
Despite high growth rates for rental properties in regional areas, rental growth across the capitals continues to outpace rent rises across the regionals, according to CoreLogic.
CoreLogic Research Analyst Kaytlin Ezzy said this trend was largely owing to the return of overseas migrants, who typically choose to rent in high-density markets of Sydney and Melbourne.
Rental growth in the combined capitals was up 2.7 per cent and 1.3 per cent across the regions, over the three months to September.
“While both markets saw the pace of quarterly growth ease compared to the June quarter, the decline in the rate of growth seen across the combined regional markets was significantly stronger,” she said.
“However, despite the easing growth trend, rental availability in both markets remains extremely tight, with the capitals recording a monthly vacancy rate of 1.1 per cent, while just 1 per cent of regional rental properties were observed as vacant in September.”
Regional residences had a substantial quarterly increase in yields, according to CoreLogic, up 20 basis points in the three months to September. Despite the robust rebound, regional housing yields are still 7 basis points lower than this time last year, at 4.28 per cent.
According to the latest quarterly Regional Movers Index, quarterly migration flows to regional areas have averaged around 15 per cent higher in the past 12 months compared to the two years prior to the pandemic.
While net migrations to regions is down from record levels seen in 2020 and 2021, they are still above pre-COVID levels.
The Regional Movers Index is a collaboration between the Regional Australia Institute (RAI) and Commonwealth Bank that examines quarterly and annual trends in persons relocating to Australia’s regional areas.
RAI CEO Liz Ritchie said migration from our capitals to Australia’s regions has remained elevated, with a slight uptick of 2.4 per cent on the June quarter.
“People are still voting with their feet and we need to ensure that regional Australia can accommodate this continuing trend – specifically around housing and essential services,” Ms Ritchie said. ”
Mirroring Census results, the most popular places in Queensland are the Gold Coast and Sunshine Coast. Regional regions in the Sunshine State now account for 37 per cent of total net inflows from capital cities in rural Australia, surpassing regional NSW and regional Victoria.
South Australia continues to dominate the top five local government areas (LGAs) with the highest relative rise in capital-city inflows, with the number of capital-city residents migrating to areas such as Mount Gambier more than tripling in the last year. Regional movers to Whyalla increased by 55 per cent, while Port Lincoln had a 48 per cent rise.
Dardanup in Western Australia, where agricultural and infrastructure developments are driving growth, has been named one of the top five local government areas for the first time. Meanwhile, capital-city inflows into Moorabool have increased by almost 88 per cent.
The major LGAs in the east capitals continue to be the most attractive migration destinations for city people looking to relocate to the region.