Our national property markets have changed forever.

The latest data confirms Sydney and Melbourne are the biggest losers of Australia’s big population shift, whilst the regions have never looked more attractive. Thousands of Australian’s are escaping our largest cities each month in favour of low-density lifestyle locations.

Here is a great article from The Australian that we thought we should share:



Compared to 2020, more of us are on the move this year. Internal migration data from the ABS counts population movements between the different capital cities and the states’ remainders (the data doesn’t account for people moving within a region or to overseas). The first quarter of 2020 saw 153,000 Australians move between the 15 regions, by March 2021 that figure rose to 182,000.


So, who wins and who loses in the big population reshuffle?

Let’s start with the losers. Sydney and Melbourne both bled population.

Compared to last year’s March quarter, Sydney held its ground. Sydney always experiences negative internal migration because it functions as a launchpad for international migrants. Migrants initially move to Sydney, after a few years of talking to colleagues and friends, many leave Sydney behind to seek opportunities elsewhere.

Melbourne’s big losses can largely be blamed on the 2020 lockdowns.

The number of people moving to the Victorian capital in the first quarter of 2021 was even slightly higher than the year before (20,300 instead of 19,200; an increase of 5 percent), as some people delayed moving to Melbourne. However, many more people (28,500 compared to 21,400) than last year left Melbourne in March 2021.


So, who gained population in the big reshuffle?

Aussies rediscovered regional Australia. In the March quarter, a net 11,800 people left the capital cities behind to settle in the regions – a record high. But why did they move to the regions?

First, policies and budgets strengthen the agriculture and manufacturing sectors to aid the Covid recovery. These sectors are over-represented in regional Australia.

Second, after being locked down for months on end, at least some city dwellers really took to the idea of a low-density regional life.

Third, the working from home revolution weakened the gravitational pull the inner-city had on office workers.

Now that businesses have the relevant digital infrastructure in place, Aussies don’t need to take the commute into account as much when looking for housing. This makes regional locations within a two-hour drive (just in case the boss calls you in) from the inner-city very attractive.

Fourthly, the federal government budgeted generously for infrastructure upgrades that are aimed at improving the connectivity between regional hubs and the capital cities. This means more opportunities for regional businesses and workers.

While the regions never looked more attractive, their success creates a few problems.

Even moderate population growth can create a housing affordability crisis in a small town. Add a few hundred more people than expected and rents go through the roof.

The local markets just weren’t prepared for such a surge. Nobody told them that demand for housing was going to rise.

Workers on inner-city incomes can easily outbid local workers on low- and middle-incomes, resulting in a housing shortage that hits low-income regional residents especially hard.

In theory, this regional price surge is corrected by the market. If there is demand for housing, the council makes land available, and local developers quickly increase the housing stock. After a little while supply increases and everyone is happy.

As Albert Einstein remarked, theory and practice are only the same in theory. Regional developers don’t appear to be adding enough housing stock. This isn’t necessarily due to NIMBY council’s unwillingness to rezone. There is a huge skills shortage in regional Australia.

Skilled construction workers are needed to allow local property developers to grow.


But how can regional businesses attract low-and-middle-income workers to a region during a housing shortage?

This conundrum can be solved slowly by creating a workforce that matches local market needs through the TAFE system. Transforming a high-school graduate into a much-needed construction worker takes a few years though.

The four drivers that attract people to regional Australia are largely here to stay. For the regions to tap into that demand in the short-term, councils need to be quick in making land available, developers need to believe in their region and add housing stock if they get the workforce.

In the medium-term, TAFEs need to service the needs of the local economy by creating construction workers at scale. Did I mention that universal free TAFE would help?

Demographics, consumer preferences, and policy settings suggest the demand for regional living will continue throughout the 2020s.

However, the interconnected shortages of affordable housing and skilled workers are jeopardising the future success of regional Australia. It is the responsibility of proactive councils, developers, and TAFE providers to ensure regional Australia can utilise the growth opportunities.