Small towns the big winners

As COVID-19 continues to play out across the country, it appears as though regional Australia could be on the cusp of a revival.

With many inner-city areas suffering from severe job losses and a lack of migration, regional Australia could stand to benefit from both changing sentiment and strengthening local industries.

It might come as a surprise that not all industries have been impacted by widespread job losses.  In fact, there are six out of the 19 major industries that have seen an increase in jobs since February. Those industries include utilities, agriculture, public admin, finance, real estate, wholesale trade and together they have added 100,000 new jobs to the economy. On the flip side, these new jobs haven’t been enough to cover the 922,000 jobs that were lost in the other 13 industries.

Six out of the 19 official industries managed to create new jobs since February. The successful six industries (utilities, agriculture, public admin, finance, real estate, wholesale trade) collectively added 100,000 jobs — not nearly enough to make up for the 922,000 jobs lost in the contracting 13 industries but enough to warrant a closer look at the geographic concentration of these job-creating industries.


How different industries are weathering the COVID storm
Total employment by industry in Australia in February and May 2020

IndustryMay Quarter 2020February Quarter 2020Difference May 2020 to Feb 2020 (%)Difference May 2020 to Feb 2020 (#)
Electricity, Gas, Water and Waste Services16913624%32
Agriculture, Forestry and Fishing3613377%24
Public Administration and Safety8468292%18
Financial and Insurance Services4904743%15
Rental, Hiring and Real Estate Services2202143%6
Wholesale Trade3893861%4
Construction118011820%-3
Mining227238-5%-11
Information Media and Telecommunications188212-11%-24
Manufacturing865909-5%-44
Other Services443493-10%-50
Administrative and Support Services393450-13%-57
Education and Training10361097-6%-61
Professional, Scientific and Technical Services11091172-5%-63
Health Care and Social Assistance17311798-4%-67
Retail Trade11831261-6%-79
Arts and Recreation Services160252-36%-92
Transport, Postal and Warehousing572666-14%-95
Accommodation and Food Services654931-30%-276
Grand Total12,21513,037-6%-822

Interestingly, Australia’s towns that have a heavy focus on public service and the military often have an employment profile that makes them very resilient during downturns. That’s clear in cities such as Canberra in which 36% of the workforce comprises Government jobs which are the safest of all.


Government and military jobs soften the fall
Share of workers employed in industries that have grown during COVID-19

Town nameGrowth industries
Canberra - Queanbeyan35.6%
Jobs outside of the state's largest cities (ACT)31.3%
Jobs outside of the state's largest cities (SA)29.2%
Jobs outside of the state's largest cities (OT)27.4%
Darwin27.0%
Jobs outside of the state's largest cities (WA)26.4%
Jobs outside of the state's largest cities (Qld)26.3%
Jobs outside of the state's largest cities (NT)26.2%
Jobs outside of the state's largest cities (NSW)25.8%
Jobs outside of the state's largest cities (Vic)25.7%
Jobs outside of the state's largest cities (Tas)25.0%
Alice Springs23.9%
Port Lincoln22.7%
Murray Bridge22.2%
Port Augusta22.0%
Townsville21.6%
Sale21.4%
Traralgon - Morwell21.1%
Moe - Newborough21.0%
Mildura - Wentworth21.0%
Hobart20.4%
Esperance20.0%
Warragul - Drouin19.9%
Nowra - Bomaderry19.9%
Swan Hill19.3%
Griffith19.3%
Lithgow19.2%
Horsham19.2%
Grafton19.1%
Goulburn19.1%
Sydney19.1%
Wagga Wagga18.6%
Mount Gambier18.6%
Toowoomba18.3%
Gisborne - Macedon18.3%
Bundaberg18.2%
St Georges Basin - Sanctuary Point18.1%
Parkes17.9%
Albany17.8%
Adelaide17.7%
Muswellbrook17.7%
Kingaroy17.5%
Emerald17.5%
Bacchus Marsh17.5%
Coffs Harbour17.4%
Ulverstone17.3%
Albury - Wodonga17.3%
Brisbane17.3%
Dubbo17.2%
Singleton17.0%
Devonport16.8%
Shepparton - Mooroopna16.7%
Rockhampton16.7%
Tamworth16.7%
Bathurst16.7%
Geraldton16.6%
Melbourne16.6%
Yeppoon16.3%
Launceston16.3%
Warrnambool16.2%
Melton16.1%
Cairns16.1%
Port Macquarie16.0%
Nelson Bay16.0%
Bendigo16.0%
Wollongong15.9%
Central Coast15.7%
Orange15.6%
Broome15.6%
Perth15.6%
Colac15.5%
Geelong15.4%
Karratha15.3%
Broken Hill15.3%
Newcastle - Maitland15.2%
Burnie - Wynyard15.2%
Victor Harbor - Goolwa15.2%
Portland15.2%
Bairnsdale15.1%
Armidale15.1%
Maryborough15.1%
Gympie15.0%
Kempsey14.7%
Batemans Bay14.6%
Yanchep14.6%
Camden Haven14.5%
Wangaratta14.5%
Warwick14.4%
Busselton14.3%
Echuca - Moama14.1%
Bowral - Mittagong14.1%
Mackay14.0%
Ballina14.0%
Lismore13.8%
Sunshine Coast13.8%
Forster - Tuncurry13.7%
Morisset - Cooranbong13.6%
Gold Coast - Tweed Heads13.4%
Ballarat13.4%
Mudgee13.4%
Bunbury13.3%
Hervey Bay13.1%
Ulladulla13.0%
Gladstone - Tannum Sands12.4%
Taree12.3%
Port Hedland12.2%
Kalgoorlie - Boulder12.0%
Mount Isa11.9%
Port Pirie11.4%
Whyalla10.3%
Grand Total18.7%

At the same time, there are a number of agricultural towns with 2000 to 5000 residents that have very secure employment. Robinvale in Victoria (36 per cent) and Woolgoolga in NSW (35 per cent) are two examples.


The 30 towns with the most COVID resilient job profile

Town nameStateGrowth industries
Canberra - QueanbeyanAustralian Capital Territory35.6%
DarwinNorthern Territory27.0%
Alice SpringsNorthern Territory23.9%
Port LincolnSouth Australia22.7%
Murray BridgeSouth Australia22.2%
Port AugustaSouth Australia22.0%
TownsvilleQueensland21.6%
SaleVictoria21.4%
Traralgon - MorwellVictoria21.1%
Moe - NewboroughVictoria21.0%
Mildura - WentworthNew South Wales21.0%
HobartTasmania20.4%
EsperanceWestern Australia20.0%
Warragul - DrouinVictoria19.9%
Nowra - BomaderryNew South Wales19.9%
Swan HillVictoria19.3%
GriffithNew South Wales19.3%
LithgowNew South Wales19.2%
HorshamVictoria19.2%
GraftonNew South Wales19.1%
GoulburnNew South Wales19.1%
SydneyNew South Wales19.1%
Wagga WaggaNew South Wales18.6%
Mount GambierSouth Australia18.6%
ToowoombaQueensland18.3%
Gisborne - MacedonVictoria18.3%
BundabergQueensland18.2%
St Georges Basin - Sanctuary PointNew South Wales18.1%
ParkesNew South Wales17.9%
AlbanyWestern Australia17.8%
   
Australian average 18.7%

The 30 towns with the most vulnerable COVID job profile

Town nameStateGrowth industries
WhyallaSouth Australia10.3%
Port PirieSouth Australia11.4%
Mount IsaQueensland11.9%
Kalgoorlie - BoulderWestern Australia12.0%
Port HedlandWestern Australia12.2%
TareeNew South Wales12.3%
Gladstone - Tannum SandsQueensland12.4%
UlladullaNew South Wales13.0%
Hervey BayQueensland13.1%
BunburyWestern Australia13.3%
MudgeeNew South Wales13.4%
BallaratVictoria13.4%
Gold Coast - Tweed HeadsQueensland13.4%
Morisset - CooranbongNew South Wales13.6%
Forster - TuncurryNew South Wales13.7%
Sunshine CoastQueensland13.8%
LismoreNew South Wales13.8%
BallinaNew South Wales14.0%
MackayQueensland14.0%
Bowral - MittagongNew South Wales14.1%
Echuca - MoamaVictoria14.1%
BusseltonWestern Australia14.3%
WarwickQueensland14.4%
WangarattaVictoria14.5%
Camden HavenNew South Wales14.5%
YanchepWestern Australia14.6%
Batemans BayNew South Wales14.6%
KempseyNew South Wales14.7%
GympieQueensland15.0%
MaryboroughQueensland15.1%
   
Australian average 18.7%

Key Trends to Benefit Regional Areas

Aside from simply secure jobs, there are four other key trends that lend themselves to regional Australia.

Traditional regional industries including agriculture and manufacturing will see a renewed focus in post-COVID Australia. After seeing empty shelves at supermarkets, the ability to produce local products is going to be a changing feature of the economy that will benefit the regions.

Similarly, the ability to manufacture medical equipment locally will also be important as we saw from the lack of ventilators and mask early on. This will benefit affordable areas and the outer suburbs of major cities as well as regional areas.

Government spending will also be a key focus for many areas going forward. A quick way to generate jobs is through Government spending on new infrastructure projects. Many of these projects have been brought forward by the various state governments with a clear focus on rail and road connections between the capital cities and regional centres. This will provide a boost to jobs and help with any slump from a lack of migration.

The third factor to benefit regional Australia is the changing attitude towards living in the country. After being forced to stay locked down in small inner-city apartments, low-density living starts to become far more appealing. Low-density living is possible in our capital cities but the price tag is high.

A large demographic change that we are likely to see for the remainder of the 2020s will be Millenials (born 1982 to 1999), starting families and looking to move into larger family homes. These types of bigger dwellings are much more affordable in regional areas and could provide a strong reason for many to move away from inner Melbourne and Sydney.

Finally, the COVID enforced lockdowns forced a large change in the way many Australians work. The ability to work from home was thrust upon us and a number of employees and employers realised that this was not only possible but even preferable.

For those looking to work from home, dwellings need to be larger and equipped with room for a study and again these will most likely be located far from the CBDs of our major capital cities. If you earn an inner-city level income and can work from home, regional areas provide a great value for money option.

For the time being, the shift towards the regions is simply an intellectual one as population data won’t be available from the ABS until the end of March 2021.

In the meantime, we can look to up-to-date residential property data from Ripehouse Advisory to gain an understanding of how the Australian people reshuffle themselves post-COVID.


The tables have turned: regional jobs appear safer than urban jobs during COVID-19
Share of workers employed in industries that have grown since COVID-19, by remoteness

Remoteness Growth industries
Major Cities17.6%
Inner Regional19.0%
Outer Regional 25.6%
Remote29.0%
Very remote25.8%
Grand Total18.7%

Transactions Increasing in the Regions

A number of local government areas in the capital cities have seen a sharp drop in transactions between July 2019 to July 2020. When new migrants don’t arrive, there is a significant drop in demand for property.

This often doesn’t show up in median property values as unsold apartments won’t be considered in the calculations. As such, prices in these inner-city areas might even go up in value as the top-end of the market keeps improving.

The largest increase in transactions has been seen in Wodonga, which recorded a 75% increase over the past 12 months, while median values have been falling. The decline is due to the shift towards lower-priced entry-level homes such as apartments. This is due to young people coming to the area and buying lower-priced starter homes.

In other regional areas, transactions increased and house prices also went up. Good examples of this are Ballina and Warrnambool. This was due to demand driving up prices, thanks to those with inner-city incomes looking to enter the regional housing markets. Another indicator that a revival in regional markets is underway.

As it stands all the data is suggesting that Australia’s small towns might just be the big winner in post-COVID Australia.

Complete and original article written by Simon Kuestenmacher and published by The Australian

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