City dwellers flock to regional property due to COVID-19

Regional property markets are seemingly benefitting from COVID-19, as the pandemic accelerates the trend of city dwellers relocating to regional areas.

While some capital city CBD markets are recording double-digit rental vacancy rates, with Sydney CBD and Melbourne CBD at 12.9 per cent and 10 per cent respectively, renters hunting in regional areas are facing slim pickings. 

In NSW’s Blue Mountains, a record-low of only 0.7 per cent of the area’s rental property market were vacant in August, nosediving from 2 per cent in March, the latest SQM Research data showed.

The Mornington Peninsula in Victoria saw a similar situation, with its vacancy rate dropping from 1.3 per cent in March to 0.7 per cent in August – also a record low for the region.

The vacancy rate in Queensland’s Ipswich plummeted from 2.1 per cent in March to 0.9 per cent in August, the lowest it has been in the area since 2005.

Louis Christopher, managing director of SQM Research, said the vacancy figures indicate an ongoing transition to regional areas, thanks to the space and low-density living these areas offer.

“The shift towards regional living continues at pace, largely at the expense of higher inner-city rental vacancy rates. I suspect there will have to be a high point in this move soon,” he said.

“However, I also suspect there will be a degree of permanency with the massive population shift.”

Home buyers no longer limited to employment hubs

Pete Wargent, co-founder of buyer’s agency marketplace Buyers Buyers, said many property buyers were moving to regional areas because of the improved lifestyle. 

“Those who work in a stable corporate environment, but do so remotely, are now taking advantage of great buying opportunities in NSW, Victoria and southeast Queensland,” he said.

“Before COVID-19 hit, there was already a strong trend of sea- and tree-change homebuyers looking for the best of all worlds – lifestyle, accessibility to employment hubs and affordable housing.”

RiskWise Property Research’s chief executive officer, Doron Peleg, said Australians have the opportunity to move away from employment hubs to an area with better lifestyle prospects, due to COVID-19 accelerating a move to remote working.

“While there’s nothing new about mobile professionals, the onset of COVID-19 changed the way we work as a nation with vastly increasing numbers working from home - and it’s here to stay,” Mr Peleg said.

He noted that demand for regional areas with lifestyle prospects is likely to surge, particularly among stable income earners. 

That demand could send property prices up in regional areas, according to Steve Laidlaw, the chief executive of People's Choice Credit Union, among the largest of its kind in Australia. 

"I expect property prices in regional centres to grow, and grow strongly,” he told the Australian Financial Review, adding that regional hubs which have strong transport networks with Sydney and Melbourne are tipped to be sought-after. 

“A million bucks doesn't buy you much in Sydney and Melbourne,'' Mr Laidlaw said.

Regional living trend big in Victoria

In Victoria, where the impact of COVID-19 has likely delivered the biggest blow, property listing views for regional areas in the state soared by about 44 per cent since July 2019, the highest point in at least four years, according to Domain Group data. 

Ad views skyrocketed in some Victorian regional areas during COVID-19, between February and July 2020, including:

• Hume – 73 per cent
• Bendigo – 68 per cent
• Shepparton – 54 per cent
• North West – 51 per cent

Domain Group senior research analyst, Dr Nicola Powell, said while city dwellers moving to regional locations was not uncommon due to housing affordability reasons, COVID-19 has fast-tracked the trend.

“The demand for a regional lifestyle has clearly been reignited,” she said.

“Demographic changes tend to be a gradual process rather than an instant switch. Prior to the pandemic, the movement of residents from the city to rural areas was already underway.”

Property investors increasingly attracted to regional areas

It’s not just owner-occupiers who want to move away from the big smoke. Property investors are also becoming more drawn to regional markets. 

More than one in five of investors prefer to park their money in regional areas, up from 15 per cent in 2019, a national survey of nearly 1,100 property investors conducted by the Property Investment Professionals of Australia (PIPA) showed. 

Coastal locations are also fielding interest, and were the most attractive investment to 12 per cent of investors, up from 8 per cent last year.

Conversely, the investor interest in metropolitan markets dropped to 61 per cent from 73 per cent last year.

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