Stuff worth knowing #4 : Market Size – Detached houses

Part 4 of our stuff worth knowing posts.

This week we cover detached house sales.

Three tables follow.

Some observations

Tables 1 and 2 outline the number of detached houses and median values across the eight capital cities and other top 20 major urban spaces in Australia.

Market size is important.  Too often real estate conversations are focused on price and, more often than not, the movement in price.  Not enough is said about sale volumes.

We have been hearing of late that regional towns are experiencing a real estate boom.

When I read about such stuff, my first reaction is to think how big a particular place is – in terms of sales – and then compare that market size with a place I know better, such as a mainland capital.  This helps me better visualise what is actually being said.

Revisiting table 2 outlines that many of our major regions are quite small when it comes to annual house sales and it doesn’t take much of an increase in sales to feel like an area is ‘booming’.

It pays to understand market size when it comes to buying, as it will be important when it comes to selling.

To that end, table 3 outlines the size of the capital city’s housing markets by price group.

Whilst there is a lot more to moving to a particular area that just the cost of housing, table 3 shows why the smaller capitals have increasing appeal.  The same applies to many regional markets too.

So, when it comes to market size, I think it is important to understand both the quantum of relevant dwelling sales and also how many sales take place in your price range.

Tables 1 and 2 also outline recent movement in sales volumes and median values.

Some areas have seen a decline in sales but increases in median values.  That might seem illogical, but one of the key rudiments of real estate is to know both demand (sales) and supply.  Sales might be falling but if the supply has contracted more, then prices can still rise.

Of course, if sales are increasing and supply is falling, there is a greater likelihood of prices increasing.  But more on that next week.

 

Rental trends

There are several cross currents running through the Australian rental market at present.  My inbox is filling up with ‘please explain’ rental focused emails.

Some are confused as to why vacancy rates are falling in many places, yet population growth has dropped, sometimes markedly.

Others don’t see how rents can be rising when unemployment and under-employment remains high.

Many investors appear worried about getting their back rent paid post the rental moratorium.  Ditto when it comes to the level of future weekly rents once JobKeeper is wound up.  Both supports are set to expire in late March this year.

It also doesn’t help when the same national newspaper – and in the same weekend edition – holds two conflicting rental market articles, one spruiking that large rental increases lie ahead, whilst (for mine) the more trusted commentator suggesting the big challenge facing residential property investors in getting a half decent rental return.

So, this post I will try and unpack some of this rental stuff.

A table and two charts follow.

My comments 

Table 1 shows that there has been a marked decline in new rental digs across Queensland.  This is more noticeable in regional Queensland than the more urban south east corner of the state.  Many other areas across Australia face similar circumstances.

Whereas there has been some shift in population movements over the last 12 months – revisit last week’s post here – the demand for new rental housing remains high across many parts of Australia and in particular in Queensland.

Our work suggests that Queensland needs an annual rental build rate in the order of 4% per annum.  This rental addition rate is closer to 5% for SEQld and near 3% in regional Queensland locales.

Table 1 shows that the recent rental builds rates are way below these benchmarks.

As a result, rental vacancy rates have been falling for some time.

Chart 1 shows that asking rents are rising across metropolitan Brisbane.  At first glance it would appear that the falling vacancy rate is the main reason why.  Yet past trends suggest that there must be other factors in play.

We have found that vacancy rate movements in concert with changes in average weekly earnings helps largely explain weekly rental movements across Australia.

Chart 2 shows the close relationship between the annual change in weekly rent and wage growth.

So, rents rise when the vacancy rate is tight (and falling) and when weekly wages are growing.

One interesting finding is that private sector wages are rising rapidly at present.

Chart 2 shows this trend for Queensland, but a review of the ABS data, shows that this is taking place across the country.

Another surprise is that public sector wage growth is lacklustre at present (lifting by just 1.9%) against the private sector’s most recent 6.3% annual lift.

JobKeeper must be the main influence on the strong private sector income lift.

And if so, this helps explain why that there has been little real complaint about the frequent snap state-based lockdowns; why confidence remains comparatively high and why current household consumption doesn’t match the level of high underemployment.

It will be interesting to see if this complacency lasts past March.

Surely not.

Outlook

To me there are too many unknowns to forecast – with any real confidence – what is likely to take place in the rental space over the next couple of years.

Except to say that the removal of JobKeeper is likely to see wage growth fall back to it lacklustre longer term trend.  This will impact on how much tenants can pay in rent.

There is little doubt that HomeBuilder has brought forward new housing supply.  This is particularly the case when it comes to suburban detached housing.  What is unknown, at present, is how much of this new supply is being built for tenants.  I do suspect it is less than 30%.  So, it’s impact on new rental supply is likely to be limited.

When it comes to the demand side of things, when will overseas migrants return to our population mix and at what volumes?

Another unknown is how many renters, who took advantage of the rental moratorium, will pay back what they owe.  And if they don’t (or can’t) will landlords give them the boot?  If kicked out, where will these folks then live?

There is little doubt that the recent slowdown in rental supply, as shown in table 1, is allowing some landlords to lift rents.  This will continue until local rental supply increases and/or wage growth subsides.

But for the life of me – given the overall state of the ‘real’ economy and especially how it is affecting those without financial assets (i.e., many, if not most, renters) – I cannot see rapid lifts in weekly rents.

End note

So, if was going to have a stab at it – with my hand on my heart – I would say that landlords face a safer future if they hold dwellings that can hold multiple tenants.

Tenants, for mine, will be forced to share.  They will gravitate to those digs that best accommodate this type of occupancy.

This has been my thesis for some time and a deep dive into the rental data when preparing this post hasn’t changed my mind.  In fact, it has reinforced it.

Upon reflection, I must admit my end note is said with some confidence.

Internal migration

It is worth adding some clarity to the regional population growth bumf that has been doing the rounds in recent weeks.

Two charts and two tables follow.

 

My comments 

Chart 1 shows two lines.  The grey line displays net annual internal population movement away from the combined eight Australian capital city statistical divisions to ‘regional’ Australia according to the most recent ABS data.

The trouble with this official release is that much of this ‘regional’ population growth – revisit the grey line in chart 1 – actually takes places in the urban edges of our capital cities.

Think Lake Macquarie, Newcastle and Wollongong around Sydney.  Ballart, Bendigo and Geelong near Melbourne and the Gold Coast, Sunshine Coast and Toowoomba neighbouring Brisbane.

My red line in chart 1 factors in these outer urban conurbations.

The ABS suggest that some 36,500 people moved out of our capital cities to regional locations over the last 12 months, yet my working advocates that only 12,500 people – some 65% less – actually moved to true regional locales such Dubbo, Armidale, Mackay or Townsville last year.

Most of the regional movement, again, has been to the outer edges of our capital cities.

Table 1 highlights this trend for Queensland.

Many of these outer urban areas are within commuting distance of our capitals and they hold much of the affordable vacant land supplies too.

HomeBuilder – on top of the numerous state government first home buyer boosts orientated towards new builds – has helped drive this migration.

Chart 2 shows the that first home buyers now account for 40% of all home loans to new builds, compared to a 30% share of all home loans for established housing.

Given there is no capital gains tax on your principal place of residence in Oz, it makes sense (well to me anyway) that first home buyers purchase older digs -renovate, personalise and then resell in the future – rather than buy a new property, which often has little short to medium term capital upside.

But the plethora of government grants has obviously made new digs very attractive.

For now.

For mine the government largesse targeting first home buyers has had more influence on the recent increase in ‘regional’ population growth than any covid-related lifestyle rethink.

Once HomeBuilder expires, I believe we will see a marked reduction in regional population growth.

Also, one of the challenges facing regional Australia is that much of its population gains are older people.  Young people are still attracted to our capital cities.  See table 2. 

If regional Australia is going to advance in terms of its population and economic footprint it will need to attract young, entrepreneurial peeps.

Whilst there has been some improvement in the space – revisit table 2 – the jury, for mine, is still out.

Stuff worth knowing #3 – Future housing demand

Here are my three tables of base case numbers regarding future housing demand by lifecycle segmentation.

Table 1 outlines my segmentation of the Australian population by lifecycle age groups.

Table 2 shows the size of the Australian population by lifecycle segment for June 2020 and what is estimated to happen in mid 2025.

The actual population count might be less in 2025 – due to current restrictions on overseas travel and hence net overseas migration  – but the distribution of population by age group in 2025 is unlikely to change that much from the current forecast.

Table 3 shows the annual population growth by lifecycle segment over the next five years the average household size by lifecycle segment (as at 2019) and an estimated annual need for new dwellings by each lifecycle group between 2020 and 2025.

Sadly, whilst some aren’t, most children are obviously housed with adults, so their numbers (as shown in table 2) are encompassed in the other lifecycle segments.

Again, the actual volumes might be lower – due to Covid again – by the annual housing demand distribution as shown in table 3 isn’t likely to change that much.

Putting Covid’s current impact aside  – however, I do, think that assuming vaccines work etc., the present federal government will boost overseas migration to backfill any population intake shortfall experienced in 2020 to 2021 – there is an underlying need to build about 142,500 new dwellings across Australia each year between 2020 and 2025.

And over the next five years, much of Australia’s new housing demand is very likely to take place across three lifecycle segments being – retirees, families and first home buyers.  Revisit table 3.

It is little wonder that HomeBuilder has hit the mark.

Stuff worth knowing #2 – Population + growth

Name calling aside, I hope you had a great Australia Day yesterday.

We continue the ‘stuff worth knowing’ missives this post, with base case numbers regarding population and recent growth.

Three tables this post.

How this stu­ff can help you 

When you read, hear or are told something statistically based it is helpful to have a base case to make a comparison.

This base case intel is the ‘bird’s eye’ statistical perspective –  a helicopter’s view so to speak – whilst what we mostly hear or are told is from a ‘worm’s eye’ viewpoint or from personal perception.

For example, I was told over the Christmas break by a friend that Hobart was the fastest growing Australian capital city and with just under half million residents, ‘Slowbart’ was set to overtake Canberra in size.

My friend meant well but a quick review of table 1 shows he was talking bullocks.

He did make, it must be said, a somewhat amusing quip about which capital was the slowest.

Moreover, I kept on reading how regional Australia is going to take the ‘lion’s share’ of the country’s population growth in coming years.  I don’t know what these peeps mean by ‘lion’s share’ but a quick Google search (whilst we still can!) suggests it means the ‘largest proportion’ or ‘major share’.

Yet tables 1 and 2 shows that 80% of the recent population growth takes place in our capitals and when you include the outer conurbations of our major capitals (Gold Coast, Sunshine Coast, Newcastle etc) the capital city metropolises attract 90% of the current population gains.

It will take more than Covid19 to turn this ‘Pasha Bulker’ towards regional Oz.

More concerning is the persistent claim – often used by investment sellers trying to flog Queensland housing – that the Sunshine State attracts 1,000 new interstate residents per week.   I received two spruiky emails over the last week holding such statements.

Table 3 shows that this statement is inflated 2.5 times, with the most recent net interstate movement to Queensland being closer to 400 per week.

…..

It does help to keep this type of reference material handy.   Keeping a few of the key stats in your head pays dividends too.

Why not revisit the tables before your next driving staycation and impress your friends and relations when someone asks, ‘how many people live here?’  Instead of the usual guesswork, you can answer with some authority.  Bonus points galore.

And if you were smart you would raise the question and make a wager on the closest answer.

See the Matusik Missive can help you in numerous ways!

Next Tuesday we will cover housing buyer segmentation base case reference stats.

Stuff worth knowing #1 – Housing demographics

Happy New Year and all that jazz. 

If 2020 taught us anything at all, it is that some numbers are thrown around as if they are vital yet many of us don’t really know if they are true; actually, important or what they even mean.

More often than not, we don’t have a simple set of base line reference points to help ground truth or add clarity.

Of course, I am talking about Covid-related statistics here, but there is also a need for a simple, yet solid, range of base line reference numbers to help make sense of the housing market too.

So instead of posts, typical at this time of the year, guessing what might happen over the next 12 months – in coming weeks I will be sending you a range of numbers that I like to keep in my head or have within easy reach.

These numbers help me understand what is going on when the latest headline housing market statistic comes across my bow.  I think they will help you too.

This week let’s cover housing demographics.

How this stu­ff can help you 

When I read something about apartment demographics, for example, I compare what is being said against these baseline essentials:

  • there are about 2 million apartments across Australia
  • they represent about 20% of Australia’s dwelling stock
  • yet they hold just 10% of the country’s residents at 1.9 people per apartment
  • a third are unoccupied most of the time
  • they average 105m2 in size and most hold two bedrooms
  • apartment residents, typically, have one or two cars
  • most residents live alone or as a couple, meaning there are usually one or two people living in an apartment
  • two-thirds of Australia’s apartments are rented

This base line data set helps me determine if what is actually being reported – in this example about apartment demographics – is new, and if I think so, then I can focus on working out the basis behind this new information and its relevance.

Using this type of reference information as a guide – I must admit – often finds that much of what is reported in the housing market space isn’t new or important at all.

Matusik Missives being the exception of course!

Next Tuesday we will cover population-related base line reference stats.

Big Smoke joins the Hayseeds + Goodbye 2020

Well, it’s a wrap.

But before you all go off and do whatever you do at this time of year, there are a few things I want to say.

Big smoke joins the hayseeds

There has been much written about peeps moving out of our cities to more regional places this year.  Almost all have been written from the big smoke’s perspective.  Only a few journos have bothered to look at the other side of the coin.

I am, these days, a hayseed.  We moved to a small village, an hour south of Hobart, before Covid and it was part of a long-term plan.  We have been planning this move for over ten years.   So, if you are seriously considering a similar move – but not to Tasmania please as we are now FULL – then here are some things that we have learnt so far.

  1. Don’t talk about money or your financial situation. The locals don’t care, they aren’t impressed, and it is the quickest way to ostracise yourself.
  2. If you have personalised licence plates or are into similar shows of, well wankiness, then you might really ask yourself if moving a regional town, especially a small one, is really for you. Best drop all wonkiness too!
  3. If you think the move will change you, or your relationship, the maybe take a breather and think again, old habits die hard, leopards don’t change their spots. You get the drift. We weren’t going to get a TV screen when we moved.  Work as much.  Go out a lot more. Etc. Etc.
  4. Don’t complain. The local café, and other such businesses, open their set hours, there is often little choice and folks take their time turning up, especially when you employ them.
  5. Worse still don’t make enemies. What might be done, even encouraged, in the big smoke, could make your life hell in the hayseeds. Drop flipping the bird, loud hooting of the horn, cutting in at the grocery line or stealing parking spots.
  6. On a more positive note, if the weather is good embrace it. The locals do.
  7. Ask the local store owners what’s what and who’s who. Don’t announce your arrival, they can smell the newness on you from a mile away. And this is important, support all their businesses.  It will cost you more but well that’s surely one of the reasons you moved isn’t it, for that sense of community.  If so then you will have to support local things, including business.
  8. Having said that, and to misquote Dylan, “the locals don’t need you and they expect the same”. So, don’t get any ideas – well not too soon – about how you could ‘change the town’. Think them sure, wax lyrical plenty at home but don’t air that shite in public.  This is another sure way to ostracise oneself.   And if you are going to get involved, which is to be encouraged, slowly slowly.
  9. Pay your bills on time and don’t be too much of a pain in the arse if employing tradies, yard help and when receiving deliveries or similar. Yes, the locals want your work and brass, but they aren’t slaves, they aren’t below your standing and, well in small places, the word gets around fast. Spend time talking to them too, ask them who they are, what they know, you they recommend, it will pay dividends in the end.
  10. It will take at least two generations for you to be ‘accepted’ as a local. So, don’t even try. It’s their town, you are a blow in.  You might think you are putting down some roots.  Deep ones even, but the locals will think otherwise.

And once you get all that down pat, you might have some time left to read or listen to some tunes.  Below are some new books and music I enjoyed this year.

Goodbye 2020

Many of us are glad to see the back of 2020.  This year was a good one for us on a personal level, and it wasn’t too bad business-wise either, but it wasn’t a great one – if you ask me – regarding the wider stage.

The initial reaction to Covid19 was understandable.  But as the year rolled on the hysteria, alarm and inanity escalated to the extent that it has now become ludicrous.  We are shutting down places on whims.  And the ‘rules’ of engagement defy science and logic; most are in cloud cuckoo land.

We have also relinquished a lot to keep infections low.

Yes, it would be nice to save every life.  True some 900 people have died with Covid19 this year, yet about the same number died from the flu across Australia last year.  This year, due to social distancing etc., flu-related deaths were fewer than 40.

We could stop up to 1,000 deaths each year but a what cost?

The cost of what we have done, and how the agenda has been hijacked, will be felt for a long time.

Next year should be better, economically – well fingers crossed, and I do think we are putting a lot of pressure on 2021 if you ask me – but beyond the short-term economic bump, we will have to pay the cost of 2020’s hysteria.  And that cost will embrace far more than just things economic.

My biggest concern is how easily we gave away our civil liberties.

To paraphrase Chris Kenny recently from the Weekend Oz: “We are eroding our national character.  Once resourceful, self-reliant and anti-authoritarian we have become timid, afraid, longing for ‘rules of law’ and looking for government indulgence and protection.”

Also, of concern is how the media – in all its forms and across most ownerships – now just amplifies yet rarely interrogates.  Many things this year just didn’t pass the ‘pub test’, yet too many of us accepted what was being said or written as the gospel truth.

I do believe that it was our island nation status, our largely warm and relatively dry climate and our existing health system that had more to do with keeping Covid19 at bay than anything else.  For mine, government efforts (and of course bungles) caused more harm than good.

Dealing with Covid19 (or similar) is really a marathon, not a sprint.  We need to stay calm and carry on.

And on that note have a great Christmas and New Year’s.  Stay safe and spend a bit of it with someone, or doing something, that matters.

The Matusik Missive will be back on Tuesday 19th January 2021.

2021: A sweet spot

Interest rates are super low.  Foreign travel has been ruled out for now, making upgrading or buying a new home more attractive. Aussies are emerging from lockdown and more restrictions are being eased. Higher home prices are boosting purchasing power for other assets. Taxes have been cut. And the government continues to operate wage subsidy schemes and housing incentives.

And as our summary of NAB’s third quarter housing constraints survey shows there appears to be little getting in the way of 2021 being a housing market sweet spot.

Constraints on new housing developments:

  1. Labour availability, improved over last 12 months
  2. Construction costs, little change over the last 12 months
  3. Housing affordability, deteriorated over last 12 months
  4. Sustainability of recent house price gains, deteriorating
  5. Lack of development sites, little change
  6. Tight credit, improving
  7. Interest rates, improving

Constraints on established housing:

  1. Returns on other investment, improving
  2. Employment security, deteriorating slightly
  3. Level of prices, limited change
  4. Lack of stock, deteriorating
  5. Access to credit, improving
  6. Interest rates, improving

Prices are expected to rise during 2021, and maybe more than the talking heads are suggesting.

I have no idea really by how much prices could rise.

I don’t like predictions.  Many want me to put a number on a future outcome. I resist doing such as it really is guesstimating at best. BS more likely. And the last 12 months provides more evidence that such punts aren’t worth much.

I rather limit my endeavours to foresight. I know that sounds quite up myself, but I am into trying to understand the shape of things rather than presuming their exact structure or mould. I think that is more accurate and useful. To understand is better than blind acceptance.

And 2021 looks like it is shaping up to be a sweet spot for residential property. But just as circumstances align well for 2021, the medium-term conditions don’t look as rosy. Economic reality will take hold soon.

Enjoy it whilst it lasts.

PS Now here is a punt, if lockdown was 2020’s idiom of the year, then sweet spot could take the title in 2021.

Overseas migration + foreign buyers

This week lets discuss some things from overseas.

Overseas migration

Overseas migration, like internal migration, involves a net result, being people arrive from overseas, whilst others leave Australia to live elsewhere.

Chart 1 shows that – pre Covid – some 10,000 people each week were arriving from overseas, whilst 6,000 folks were leaving Australia, again each week, resulting in a net overseas migration intake of 4,000 per week.

The number of people leaving Australia has been on the rise.

One could quip that it is mostly youngsters escaping their HECS debts.  But on a more serious note, some one million expats are living aboard.

Australia is the envy of many and our Covid results have increased our appeal.

I do wonder how many expats are now lining up to return.  I also like to muse how many are truly now looking to leave.

Yes 2021 will see a lower net overseas intake, but assuming expats can get back, I do ponder how low this net result will actually be.

Plus 2022, and beyond, could see a boom in overseas arrivals.

Watch this space.  Any negative result here, for mine, is likely to be short lived. Foreign buyers

Developers who largely rely on overseas buyers are lining up now, calling for relaxations in FIRB regulations and reductions in stamp duties for foreign buyers.

Apparently Covid has “decimated” offshore market sales.

Hmmm, well chart 2, shows that overseas buying of Australian housing assets has been on the wane for some time.

Remember it was China that closed its capital account in 2015 which stopped the flow of illegal funds into Australian real estate and ended the buying up of the Aussie middle class.  There is little we can do to revive China’s interest.

I am a strong believer that we should limit the proportion of new stock that we sell to foreign buyers.

I have said that this maximum should be fifty percent in the past.  I am starting to think that even that is too high.  We shouldn’t rely of overseas buyers to make our housing developments work.  Twenty five percent might be more appropriate and only if the developer is headquartered overseas and is bringing new capital and experience down under.

When it comes to resales, we should have a very simple rule, ‘no passport, no buy’.

We should only sell established housing to Australian passport holders.

Foreign buyers should also pay a higher stamps and land tax too.

Fighting words maybe, and if so, dukes up.

Internal migration

Population growth is made up of three components – natural increase (births versus deaths); net internal migration and net overseas migration.

We covered natural increase earlier this year.  To revisit go here.  Next week we will update overseas migration and this week we cover internal migration.

Internal migration involves both interstate and intrastate population movements.  It also involves a net result, being people arrive, and depart, a location.

This post is also a bit data heavy.  But bear with me.  Three charts and three tables are included in this post.

Let’s start with the charts.

The talking heads have been making way too much of Covid19 and its ‘surprise’ impact on capital city populations.   Chart 1 shows that the combined capital cities have been losing population to regional locations for some time.

Chart 2 shows that Brisbane continues to gain internal migrants, whilst Melbourne has been losing internal population growth for years and Sydney, right now, appears to be seeing less people leave the city.

Chart 3 illustrates that the regions in NSW, Victoria and Queensland have all been gaining internal population growth for a considerable time.

It is important to note that the Gold and Sunshine Coasts in Queensland; Newcastle and Wollongong in NSW and Ballarat and Bendigo in Victoria are regarded as regions.

One could debate that these locations are within a daily commute of the capitals and maybe shouldn’t be counted as a ‘region’, like say Mackay or Cairns.

When you include these outer conurbations in the capital city counts, the wider capital cities – despite Covid19 – continue to dominate internal migration movements in Australia.

Now lets look at the tables.

Table 1: Select capitals: Internal migration by location

Location Sydney Melbourne Brisbane
Capitals
Sydney 0% 11% 10%
Melbourne 11% 0% 8%
Brisbane 10% 8% 0%
Adelaide 4% 4% 2%
Perth 4% 5% 3%
Canberra 5% 3% 2%
Other capitals 2% 2% 2%
Total capitals 36% 33% 27%
Rest of state/territory
New South Wales 46% 8% 11%
Victoria 2% 47% 3%
Queensland 13% 10% 56%
Other 3% 2% 3%
Total rest of state/territory 64% 67% 73%
Matusik analysis of ABS data.  June Quarter 2020.

Sydney + Melbourne net departures.  Brisbane net arrivals.

Table 2: Select rest of states: Internal migration by location

Location Rest of NSW Rest of Victoria Rest of Qld
Capitals
Sydney 35% 4% 8%
Melbourne 7% 51% 7%
Brisbane 13% 5% 52%
Adelaide 2% 2% 3%
Perth 2% 1% 2%
Canberra 8% 3% 2%
Other capitals 2% 3% 3%
Total capitals 69% 69% 77%
Rest of state/territory
New South Wales 0% 15% 15%
Victoria 7% 0% 4%
Queensland 21% 11% 0%
Other 3% 5% 4%
Total rest of state/territory 31% 31% 23%
Matusik analysis of ABS data.  June Quarter 2020.  All net arrivals.

Table 3: Internal migration by age group

Age groups      
Capitals Sydney Melbourne Brisbane
0-14 years 26% 23% 15%
15-24 years -5% 5% 39%
25-44 years 31% 32% 37%
45-54 years 33% 30% 3%
Over 65 years 15% 10% 6%
Total 100% 100% 100%
Rest of state Rest of NSW Rest of Victoria Rest of Qld
0-14 years 33% 20% 30%
15-24 years -39% 4% -14%
25-44 years 34% 34% 29%
45-54 years 58% 31% 38%
Over 65 years 14% 11% 17%
Total 100% 100% 100%
Matusik analysis of ABS data.  June Quarter 2020.

Sydney + Melbourne net departures by capitals.  Brisbane + all rest of state are net arrivals.

Table 1 shows that most people that leave either Sydney or Melbourne go to a regional location in NSW or Victoria.  Most new internal residents arriving in Brisbane come from intrastate.  Across all three east coast capitals experience considerable internal population movement between capitals cities too.

Table 2 looks at internal migration across the rest of NSW, Victoria and Qld.  Regional NSW attracts considerable internal population growth from SEQld – largely in northern NSW – as well as from Sydney and Canberra.  Most of Victoria’s regional internal growth comes from Melbourne.  Whilst Qld’s regional markets attract residents from Brisbane, regional NSW and from Sydney and Melbourne.

Table 3 shows that most people leaving Sydney and Melbourne are aged between 24 and 54 years of age.  Many are chasing more affordable housing.  Brisbane attracts a younger profile, due somewhat because of its more affordable housing price points.

 Table 3 also shows that regional markets attract older residents and lose younger residents.  If these regions are going to really ‘kick arse’ – to paraphrase several major media articles in recent weeks – it needs to attract a younger demographic profile.

Regional universities used to help achieve this, but maybe with less overseas students in our capital city colleges – due to Covid travel restrictions and the current China fracas – more regional youngsters might opt to undertake their tertiary education in the big smoke.

Plus, unlike many of the regions, there is plenty of student styled digs to rent in our inner cities.

My final comments are that Covid19 is likely to see more people consider a life outside of the capital city.  But this has been a long term trend.

Most are really moving to the outer conurbation – on the edges of what the official statistics currently define a ‘capital city’ – where housing is more affordable and better suits our demographic, and importantly, psychological makeup.

We are suburban people.  We like a nexus to the ground; we want to own our own bit of dirt and we appear to be prepared to accept the commute (and distance) to get it.

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