Complete and original article written by Bernard Salt, MD of The Demographics Group.
Australians have a long history of moving around the country to areas where they see the most opportunity, while at the same time still wanting the tree or sea change lifestyle.
The last time a recession struck, we saw a net migration loss from Victoria over four consecutive years up until 1994. We’ve seen the same things happen in other states as well.
Generally speaking, these moves have been offset by natural increases from births, however, the net loss still weighs on demand for housing in the areas that people are leaving.
We saw this play out in South Australia following the collapse of the state bank in 1990. WA housing saw a similar collapse following the end of the most recent mining boom in 2015.
In Sydney, it was a similar story following the 2000 Olympics, which led to several years of stagnation.
Interestingly, it is generally Queensland that wins out with sunbelt drift. People move to the sunshine state seeking lifestyle and opportunity. The same thing occurs in the US as Americans drift from cold New York to sunny Miami while in the UK, the Brits move from Cornwall to places like Spain’s Costa Brava.
Based on what we’ve seen in the past, it is highly likely that Victoria will again experience a net migration loss. However, generally speaking, when tracking this data there is often a six-month delay. During that time, housing markets rise and fall as population movements ramp up during a recession.
Based on what we’re seeing this time around, the demographic impact will likely be quicker. However, we won’t get official confirmation that this trend is even underway until March or maybe June next year.
To better track the data, we need to look for a leading indicator.
Property research group Ripehouse Advisory, has looked at residential property settlement metadata for each state and territory by local government area.
Using this data we can see where the population movements are headed thanks to the settlement data from each LGA.
The City of Brisbane leads the way with 241 net extra property settlements in February this year when compared to last year.
Then come other residential property purchase hot spots; these are places where Australians increasingly wanted to live, or invest, in the month prior to the coming of the coronavirus.
Prior to COVID lockdowns, we can see that sixteen of the top 20 local government areas are located in Sydney, Melbourne, Brisbane and Canberra. Only four are located in regional Australia and these are close to the capital cities - in particular, the Gold Coast, Wollongong and Geelong.
When we compare this data to the post-COVID environment that we are now in, we can see a very different situation.
The largest increase in residential property settlements in September 2020 as compared with September 2019 was recorded in the City of Central Coast (includes Gosford & Wyong) north of the Hawkesbury River.
What this means is that as soon as COVID hit, Sydneysiders looked to the Central Coast for a safe haven.
What is also clear is that there was a big shift away from the metro areas towards regional locations. There was a clear focus on the Central Coast, the Mid-Coast (Forster-Tuncurry), Port Macquarie, Shoalhaven (Nowra), Port Stephens, Byron and Clarence Valley (Yamba).
What we can deduce from what is happening in NSW is that Victoria will likely now follow suit.
There has also been a surge in residential sales activity in key regional centres such as Tamworth, Maitland, Bathurst, Orange, Cessnock and Armidale. The lifestyle community of Wingecarribee Shire (includes Bowral) just outside Sydney was also popular.
Only other places outside NSW make the Top 20 residential sales locations were the Perth outer suburb of Wanneroo and the beachside city of Mandurah.
Clearly, we are seeing a trend where city siders are buying up treechange and seachange properties to escape COVID. As those from Sydney move out, we will continue to see an impact on local markets like The Entrance, Port Macquarie and Nowra.
If this is happening in Sydney and regional NSW, then we should expect the same in Melbourne and regional Victoria?
There is already a well-established long-term movement of people from the city to seachange and treechange communities around Melbourne.
Melburnians might just start heading down the Geelong Freeway, up the Hume Highway, out the Calder in search of their own sea and tree change in a bid to escape COVID. We could call these people Virus Escapees Seeking Provincial Australia or VESPAs.
We know that Victorians left their state in the early 1990s recession. They did the same during the 1890s depression.
However, it does raise the question as to whether these VESPAs will need to travel back to a CBD workplace at some time in the future. If so, we should assume they will look to move no further than 80km and 200km away, contained by places like Apollo Bay, Echuca and Wilson’s Promontory.
Apart from COVID, there are also a few other reasons why we are seeing an influx to the regions. Many towns through NSW have finally received drought-busting rains in January and February and these areas are finally bouncing back.
We’re also seeing regional areas become the envy of the city. Something that couldn’t have been said in many decades in Australia. Again thanks to COVID.
2020 has no doubt bought in a new city-country dynamic with a number of new ideas at play, including work from home on top of the appeal of the safety and the quietude of a country lifestyle.
Get ready for a potential exodus of VESPAs out of Melbourne in the near future.
Complete and original article published in the October 17th-18th Weekend Australian, written by Bernard Salt; research by Hari Hara Priya Kannan Data Scientist The Demographics Group, Will Farrell Ripehouse Advisory.