From city to country

By Jarrod McAleese

Figures released this month, detailing current housing finance, building approval and intestate migration rates, confirm the continuation of a trend that’s been synonymous with the COVID-19 pandemic thus far.

“More than 60,000 people departed Melbourne and Sydney to other parts of the country in the 12 months to March 2021,” said Housing Industry Association Chief Economist, Tim Reardon.

Notably, the change of scenery being sought by residents appears to be a permanent one – a pattern amplified by the freeze on country-to-country movement.

“The 220,000 building approvals in 2020/21 is the most in a financial year since 2017/18. Given that the population is moving, but importantly, electing to build new homes, it is unlikely that they intend to return to Sydney or Melbourne.

“ABS Housing Finance data also shows that there were 94.4 per cent more loans issued for construction of a new home than in the previous financial year. This is the most loans ever issued for construction in a 12-month period. “HomeBuilder and other grant programs have also ensured that there were more loans issued to first home buyers in 2020/21 than in any previous financial year.

“The shift in population out of Melbourne is a new trend and one that is compounded by the loss of overseas migration that has underwritten economic growth in Victoria for the past decade,” Reardon said.

But where are these residents headed? The answer: off to the regions. With working from home firmly established as the new normal and as consumers spend more time at home than ever before, the city to country shift is proving increasingly popular.

“Regional areas have seen a greater increase in building approvals than capital cities as the population shifts toward lower density areas,” said Reardon.

And this is a pattern confirmed by the latest settlement data from PEXA.

“There’s clearly been heightened activity in our regional areas, with sale settlements outside of capital cities up 36% in New South Wales, 28% in Victoria, and 23% in Queensland yearon-year. “Close to 80% of capital city settlements procured were funded with a new loan, compared to only 66% for regional settlements, suggesting metropolitan homeowners are moving to regional areas to take advantage of lower priced properties, flexible working arrangements and a change in lifestyle,” said PEXA Insights Senior Research Manager, Mike Gill.

Whether this persists into FY22 and beyond remains to be seen – but for now, it’s clear that while coronavirus remains a feature of our lives, homebuyers are favouring the serenity and space away from major hubs.