Looking to expand your portfolio? Have you considered interstate investment?
Australia has always supported a nomadic lifestyle with one of the highest levels of internal migration in the world. In fact, almost 40% of Australians change their address every 5 years. That’s a whopping average of 13 moves in their lifetime! And in the past year Australians have taken moving to a whole other level. All around us we hear stories of people relocating from cities to regional areas and from one state to another. Let’s take a closer look at what that means for the world of property investment.
On the go? Here’s 30 seconds of take outs:
- Australians are a very mobile population, with almost half of the population moving every 5 years.
- People relocate to be closer to family, for employment opportunities and due to changes in their housing requirements.
- COVID-19 has seen a mass exodus from cities to rural and coastal areas and across state and territory borders.
- Increasing interstate migration means there’s plenty of opportunities in new markets.
- Capital Properties keeps a close eye on these emerging trends so that we can help you take advantage of these opportunities.
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Why do people move?
People have various reasons for moving, mostly related to life events. Traditionally, housing is the most commonly reported motive for moving – accounting for approximately 51% of all recorded moves. People seek out bigger houses as their families expand, or they downsize when they retire to free up cash. Or they may have to move at the end of a rental lease. Traditionally these moves happen in roughly the same area and not often between cities, regions, states or territories.
The second most common reason for people to move is for family commitments, for example moving closer to family for support with kids or because their relationship ends. Family reasons used to account for 22% of all relocations within Australia. And of course, employment opportunities also matter. People move to where to jobs are.
Economic reasons for moving
People seeking employment are often driven to move interstate. Unemployment has a massive effect on a state’s economic stability. Studies show that a 5% increase in a state’s unemployment rate leads to a 0.4% increase in people moving out of that state. This coincides with a decrease of 0.4% of people moving into the state, resulting in a total loss of 0.8% in the state’s migration.
Overall though, property prices seem to have a more significant influence on interstate migration. A 5% increase in property prices can increase migration out of that state by a whopping 1%.
Who’s most likely to move?
People in their 20s are more likely to relocate than any other age group. That’s because they move to access higher education and entry-level job opportunities. It stands to reason then that renters (26%) are far more likely to move than homeowners (7.5%).
In the past newly arrived overseas migrants were more likely to move interstate than Australian born Aussies, but with COVID-19, those numbers have significantly altered.
What difference has COVID-19 made to interstate relocation?
Since COVID-19 more families than ever before seem to be joining this nomadic trend. Over the September 2020 quarter, Queensland gained upwards of 7,200 people from interstate migration, while New South Wales lost 4,100. In the same period Western Australia had the largest change in net migration, increasing from -230 people in the previous quarter to 630+ people.
Provisional internal migration data from the Australian Bureau of Statistics shows the nation’s capital cities had an overall loss of 11,200 people during July, August and September last year, making it the largest quarterly net loss since records began in 2001. Real estate agents confirmed this trend for migration from urban to rural areas with reports of a substantial rise in demand for homes across regional Australia.
In Melbourne, where the effects of the pandemic were felt more than in any other state due to an extended lockdown, the exodus increased by a factor of eight compared to the pre-lockdown period. Unsurprisingly perhaps, most of these people migrated north to Queensland. During the same September quarter, Victoria didn’t gain people from any other state or territory.
Where are people moving to?
While we know many Victorians headed north, there were just as many who abandoned the cities to move to regional Victoria. Lockdown meant that employees no longer needed to travel into the office and could instead work remotely, and many took advantage of cheaper house prices in rural locations, prioritising lifestyle over their proximity to work.
And this trend became obvious throughout Australia. CoreLogic data shows that overall house prices in regional Australia are rising at a much faster rate than capital cities. In particular, coastal regions have shown a significant growth which of course results in a corresponding demand for housing.
Why is interstate investment so hot right now?
This extra demand for housing in regional areas has subsequently resulted in rising house prices. Many buyers are seeing exponential growth in previously slow-moving markets. And the exodus to the rural and coastal areas seems to have little sign of abating as working-from-home becomes the new normal.
The Reserve Bank of Australia has indicated that the current low interest rates will remain low until at least 2024. This, coupled with the Government’s first home buyer’s incentives, make for a very attractive entry to the property market. Therefore, it’s not surprising that buyer confidence is at an all-time high.
Where to buy?
At Capital Properties we pay close attention to these emerging property hotspots. Our team works with our network partners (including Real Estate Agents, Mortgage Brokers and many more speciality property experts), to identify and predict key growth areas and assess current and future predicted property values.
Our mission is to support you in your journey to financial freedom. To find out more book your free Capital Properties discovery session now.
Source: www.population.gov.au > population-topics > topic-internal-migration