As we moved through the pandemic, regional population growth far exceeded growth in capital cities. This was the complete reverse of the pattern typically observed, where growth in regional areas steadily increases, but never by more than the growth seen in capital cities. Whilst it is not unusual for people to move from cities to regions, the flow was significantly higher during the pandemic.
Prices in regional areas during COVID grew substantially faster than in capital cities, whilst rental vacancy rates fell to extremely low levels in mid-2020 and have largely stayed there. The collapse in overseas migration was the largest influencing factor in driving the gap in population growth between regional and city centers. In turn, the larger flow of people from cities to the regions offset the loss of overseas migration in regional areas, and contributed to population numbers falling in capital cities.
Whilst population data will not be available in the immediate future, housing market data can be used as in indicator. In the 2021-2022 financial year, for which data has only just come to light, regional rental markets, have begun to ease. From May 2022, rental prices in regional areas began to fall, whilst vacancy rates on average began to improve. This trend suggests that those renting in regional areas are moving out and freeing up rental properties, which in turn, puts downward pressure on rental prices.
The Illawarra and Southern Highlands, which boomed during the pandemic, have recently become some of the worst-performing housing markets in NSW and Victoria. This is due to a large increase in rental vacancies, and falls in rental prices exceeding the national average. These trends are consistent with at least a partial reversal in the internal regional migration instigated by the pandemic.
As mentioned above, population data to confirm this theory will not be available for some time. Nevertheless, housing market data supports the notion that in our region, it looks as though the shift was temporary and is starting to unwind. Could this be a sign that people who migrated to the regions and away from the cities are in fact moving back closer to family and work? Was this surge in internal migration only temporary? Will we now begin to see a new surge of migration, from regions back to cities? Time will tell!