2 February 2021

One of the more striking trends evident over the past year has been the strength of pricing in regional markets when compared to their metropolitan counterparts.

Taking March 2020 as a starting point, capital city dwelling values have only just (at January 2021) returned to around their pre-pandemic level. By contrast, non-capital city dwelling values are now more than 6.0% higher, with strong growth evident month-by-month since September as many broader lockdown measures and travel restrictions (within states at least) became more relaxed.

Regional vs Capital City Values

This trend is most evident in New South Wales and Victoria, where metropolitan values are still in the negative. A more modest regional bias is apparent in Queensland and South Australia, where metropolitan values are in the positive. Interestingly, Western Australia is showing the opposite, with Perth emerging from a long cycle of negative movement. Additionally, in most markets house values have held better or grown more strongly than unit values.

Metro vs Non Metro Dwelling Value Chnage by State

A combination of working from home and broader lifestyle choices has likely driven a shift towards opportunities away from the major capital cities, and not just to regional centres within close proximity to their capitals.

New regional internal net migration date from the Australian Bureau of Statistics confirms this trend, with the September quarter recording the greatest movement of residents from capital cities to regional locations on record; 11,200 net nationally. This was the third successive quarter of record net movement to regional Australia.

Net Population Movement to Regional Australia

Furthermore, net interstate migration figures are showing a strengthening shift towards Queensland and Western Australia, largely at the expense of Victoria. Preliminary data for the year ended September shows net annual interstate migration to Queensland at 27,100, its highest aggregate since the start of 2006. Western Australia recorded its first quarter of positive movement since June 2013. By contrast, Victoria (negative 3,536) saw annual movement turn negative for the first time since 2008. This shift is expected to accelerate further over the course of 2021 if extended border closures remain a thing of the past.

While the trends favouring regional locations are strong at present and, for some, will be a permanent change, it is still likely that some rebalancing back towards the major metropolitan areas will take place over the medium-term as economic recovery progresses.