Is a regional move post-COVID right for you?

If offices are enacting work-from-home policies for longer and longer, does it still make sense to stay living in your expensive, inner-city apartment right by your work?

That’s the question some workers may already be asking themselves, as regional centres across Australia see an increase in capital growth over the last three months, according to the latest figures from CoreLogic.

However, the notion of moving to greener pastures is not unique to COVID-19 and has been steadily becoming more popular throughout the last decade.

And with home prices at decade highs across capital cities, there are potentially thousands of dollars to be saved, and time taken to save a deposit to be reduced, just by making that sea or tree change you’ve been daydreaming of.

Regional areas have strong appeal

For some, there is an obvious appeal in regional areas, particularly at a time of global pandemic crisis.

Not only are these regional areas typically more affordable than capital cities – particularly in terms of housing – but the smaller populations are a draw when trying to avoid a contagious illness.

As early as May this year, the Real Estate Institute of New South Wales (REINSW) predicted that regional areas would “do well in the long-term as a result of the pandemic”.

REINSW President, Leanne Pilkington, said she expected to see a “rise in demand for rural and regional properties”.

"I think we have all realised now that we can work from home very effectively and we don't actually need to travel to meetings like we used to," said Ms Pilkington.

COVID-19 the push some would-be movers need

According to CoreLogic research, in the June 2020 quarter, regional centres have seen higher capital growth than the capital city regions.

Eliza Owen, Head of Australian Research at CoreLogic, noted that this positive outcome for June 2020 is “short term, and is more likely tied to cyclical patterns than changes in demographic trends”.

In fact, growth rates have seen a slowdown in momentum, as they peaked around late 2019.

Ms Owen also noted that the “normalisation of remote work amid COVID-19 is more likely to bolster regional migration than slow it.

“But in the wake of the pandemic, the return to an office environment may still be desirable for some employees and employers,” said Ms Owen.

Migrating from big cities not unique to COVID-19

Between 2011 and 2016, more than 1.2 million people either moved to regional Australia or moved around regional Australia from one location to another, according to Regional Australia Institute (RAI) research.

RAI CEO, Liz Ritchie, said the notion of how we work has been “turned on its head” and that she hopes this change will “see significant population growth in regions, following on from a trend that has already been set over a decade”.

“From 2011 to 2016, our two biggest cities, Sydney and Melbourne lost more residents to regions than they gained – and this was well before COVID-19.

“Over the last few months, we’ve all had to change how we work, and this has allowed staff and employers to see that location is no longer a barrier for where we choose to work,” Ms Ritchie said.

According to RAI report ‘The Big Movers’, in the five years to 2016:

• Sydney saw a net loss of 64,756 people to regional Australia.
• Melbourne saw a net loss of 21,609 to regional Australia.
• Adelaide recorded a small net loss of around 1,000 residents.

Interestingly, Brisbane reported a net gain of 15,597 people, perhaps as it appears as an ideal location for those seeking a “sea change” from bigger cities - Sydney and Melbourne.

How much more affordable is housing in regional areas?

When it comes to deciding between buying property in a big city and buying in a regional area, the price differences are unsurprisingly sharp.

CoreLogic figures show that the median dwelling value for combined regional areas of Australia was $394,570 at June 2020. This is 38.5 per cent lower than the combined capital city median of $641,671.

RateCity research shows that on average, would-be buyers looking to buy in regional areas will take almost half the time to save for a 20 per cent deposit than those looking to buy in capital cities, based on savings amount of $400 a month.

Time taken to save a 20% deposit – capital cities vs. regional areas

Source: RateCity.com.au, Median house prices based on latest CoreLogic figures.

Note: Does not factor stamp duty or LMI as different across each state and territory. Time taken to save factors in savings interest rate of 1.50 per cent.

Making the move from a big city to a regional area is a personal decision, and the motives to do so will differ for each individual and household.

There are also important factors to keep in mind, such as access to hospitals, schools, banks, and, in some remote areas, access to internet, when considering making that sea or tree change. All of these components should come into play when making a decision as significant as relocating.

If you are serious about making a move, you may want to consider using the higher affordability of housing as a means to save a larger deposit, i.e. 20 per cent or greater.

Lenders typically reserve their most competitive interest rates for homeowners with larger deposits, as it lowers the level of risk that you will default on the loan. Further, it should mean you can avoid paying costly lenders mortgage insurance.

Here are some low-rate home loans from the RateCity database:

Compare home loans in Australia