Here’s an interesting stat: annual regional rent growth hit 11.3% in June…highest on record, and nearly double that of capital cities. Both numbers are impressive compared to the 1.1% CPI growth over 12 months to March 2021. Crazy times.
So, what is really going on in regional Australia and is it too late to get on that gravy train that could be running out of steam?
Paul Ryan, economist at REA Group, joined the Bricklet Buzz panel to discuss some key insights on this hot topic.
Here’s a rundown on those insights:
- The exodus is real and behind the regional price growth as seen in the chart provided by Paul.
- The big question is, who’s doing the migrating, and will the trend continue? Now there is some data, but it’s limited. Analysts are waiting on the results from next month’s national Census to get a better idea on the who’s who of the big movers. However, Paul did highlight that it was the owner occupier who was leading the push into Aussie regions. People looking for space, lifestyle (tree or see changer), affordability, community, and time (think no crazy commutes or traffic). As city-dwellers bought up properties in regions, it put upward pressure on property prices and rents (dwindling supply).
- An interesting discussion point on the who’s who of the big movers, was the ‘golden demographic’. These are millennials choosing to do life differently and conscious of the benefits regions offer. A recent report “Big Movers: Population Mobility in Australia” found that regionally-based millennials chose to stay in the country or moved to regional areas rather than make the move to the big smoke during the 2011-2016 period.
- A question considered by the panel was whether COVID was a catalyst that simply enabled an existing sentiment to move out of capital cities, and whether there would be a U-turn of migration from areas that were not fringe commutable. The idea of fringe commutable zones are areas that offer the benefits of regional living but are still within a comfortable distance to major cities.
Aussie regions still offer sound opportunity to savvy investors, however, you still need to do your homework.
Make sure you consider a change in sentiment once lockdown and restrictions ease and realities kick in, that regions perhaps don’t tick all the boxes, some of which you can’t do without (existing social networks, medical services, and the like). And if the workplace reverts to any level of normalcy requiring us to spend some time in the office, then fringe commutable zones could be worth a look (we’ll be doing a deeper dive into fringe commutable zones).
And perhaps if Aussie regions don’t wet your investment appetite, maybe now could be a good time to re-visit those capital cities as part of your long-term portfolio strategy J.