Satellite cities and major regional centres are attracting more Australians than capital cities, with the number of Sydneysiders relocating at an all-time high and the Gold Coast becoming the most popular place to move to in the country.
According to property market research firm Propertyology, Queensland, Hobart and parts of regional Victoria and New South Wales were the big winners, with population growth due to internal migration having a bigger impact on property markets than new migrants from overseas.
Propertyology Head of Research Simon Pressley said intrastate and interstate migrants – existing Australians who elect to move from one city to another – were likely to strengthen property prices in the cities they moved to far more than the flocks of overseas migrants looking to start a new life in Sydney and Melbourne.
“Both of Australia’s two largest cities are currently in the middle of their biggest property market downturns since the late 1980s – this is occurring at a time when both cities produced two consecutive years of all-time record high population growth,” Mr Pressley said.
“Yes, we all need to live somewhere, but there’s no law that says one has to buy the roof over their head. In fact, the vast majority of overseas migrants don’t buy for several years, if at all – they rent. This is especially the case in Australia’s most expensive city.”
Mr Pressley said analysis of Australian Bureau of Statistics (ABS) data confirmed the locations of choice for Australian residents were satellite cities, or tier-2 cities on the outer-fringe of capital cities, and major regional cities, which are classed as tier-3 cities that play the role as a ‘capital city’ for larger regions.
“Number one on Australia’s popularity winners’ list is the Gold Coast,” he said.
“With a median house price that’s only 60 per cent the cost of Sydney, the Gold Coast attracted 7,441 new residents from other parts of Australia last year.”
Interstate migration into Queensland continued to accelerate, contributing 28,668 to the state’s population growth for the year ending June 2018, Mr Pressley said.
“But only 10 per cent of Queensland’s internal migration gain chose digs in Brisbane City Council – home to 25 per cent of the state’s total population.”
In Victoria, people are being drawn to Bendigo, Ballarat, Geelong, Baw Baw, Mitchell, Wodonga and Wangaratta.
“Within Melbourne, once again housing affordability is a common denominator in the likes of Casey, Melton, Hume and Cardinia. Interestingly, their respective property markets also performed significantly better than Greater Melbourne’s 10 per cent decline in 2018,” he said.
In New South Wales, regional areas such as Cessnock, Maitland, Shellharbour, Dubbo, Tweed, Wingecarribee, and Ballina welcomed healthy numbers of new residents.
Whilst Sydney is Australia’s biggest city, the internal migration data suggests that it’s the least popular. The number of existing residents relocating away from Sydney reached an all-time record high of 27,434.
Camden, bucked the trend in Sydney, attracting 5,411 new Australian residents. I highly doubt that it’s just a coincidence that Camden has one of Sydney’s least expensive median house prices,” he said.
Mr Pressley said one of the most obvious trends in the analysis was the migration of so many people away from capital cities to regional areas.
“Last year, the 6,370 Australians who relocated to the Sunshine Coast was more than the 4,266 Australians who relocated to Melbourne,” he said.
“Likewise, for the 5,559 people who left Adelaide during the year ending June 2018, a similar combined volume of people moved to Geelong and Port Macquarie.
“The combined sum of people who decided to move town and chose Fraser Coast (1,376 people), Maitland (1,189), Bendigo (980), Ballarat (883), Tweed (829), Scenic Rim (637) and Dubbo (375) is comparable to the 6,659 people who packed their bags and left Australia’s fourth largest city, Perth.”
Why do prices rise from internal migration?
Mr Pressley said while the average person might move house every seven to 10 years, it was obviously an even bigger decision for anyone to completely relocate to another city.
Economic conditions have the biggest influence on internal migration, he said, with two of the best modern-day capital city examples being the changing economic fortunes of Perth (from Australia’s strongest to one of the weakest), and Hobart (vice versa).
Three out every 10 Australians already choose to not live in one of our capital cities.
“The population of regional Australia increased by a further 89,132, to sit at a significant 8,424,137 as at 30 June 2018. More and more people are re evaluating their need to remain in a capital city and being lured to the many wonders in other parts of our diverse country,” Mr Pressley said.
“Regional economies are continuing to strengthen with about 60,000 jobs reportedly unable to be filled by locals. The federal government have recently announced a review into migration policy so that there’s more supply of skilled labour in regional cities where demand continues to rise. It’s indicative of the strength in regional communities”
Why does internal migration matter more?
Mr Pressley said far too much emphasis is placed on the role in that population mass and population growth plays on property price fluctuations.
Of Australia’s total population increase of 391,000 people during the year ending June 2018, overseas migration made the largest contribution (237,225 or 61 per cent).
“People focus on the total population growth of Sydney and Melbourne (92,237 and 117,199 last year) without understanding that both cities received a whopping 77,000 people from overseas migration. It’s not as if the population growth is from existing Australian residents gravitating to those big expensive cities”.
However, Mr Pressley said looking at just population growth as a lead indicator of property price pressure was far too simplistic.
“At the end of the day, buyer behaviour and not population growth is what determines fluctuations in real estate prices.”
He said even if an individual town or city had zero population growth, about three to five per cent of dwelling stock changes hands within a typical year and, depending on the volume of dwellings listed for sale in that year, property prices may still grow.
“Buyer behaviour is determined by where people want to live, what they can afford to buy, lifestyle preferences, where they can get suitable employment, and individual stages of their life,” he said.