Regional Australia ReportThe COVID-19 regional shift

Author: Nerida Conisbee, Chief EconomistData: Karen Dellow, Analyst

November 2020

COVID-19 has resulted in shifts across many parts of the economy including preferences and demand for housing. Throughout regional Australia, it appears population growth is strengthening more quickly than it otherwise would have in 2020.

While these population shifts can't be confirmed until the Australian Bureau of Statistics (ABS) releases its data, we can see parts of regional Australia increasing in popularity on realestate.com.au. Search activity for regional Australiaspiked earlier this year, which has since resulted in houseprice growth.

There are two distinct trends driving up demand for regional property; lifestyle and jobs. As such, there are some areas experiencing far stronger interest than others.

Remote working as a result of COVID-19 is making a lifestyle change possible for some, while strength in parts of the economy that are more COVID-19 resistant than others, in particular mining, is also sending people to regional communities. The pandemic has also accelerated interest in some regional areas that were already very popular prior to COVID-19.

Population growth has generally been focused in capital cities, primarily because

employment and job opportunities have been located in city centres. While long

term population growth, and hence housing demand, has been capital city centric,

over the past five years, there has been a gradual shift to some parts of regional

Australia. Specifically, to areas located on the fringe of capital cities.

It’s not surprising that the swing to fringe locations has occurred most prominently

in states with our most expensive capital cities; Victoria, New South Wales, Western

Australia and Queensland.

The city of Geelong was the beneficiary of the strongest regional shift prior to

COVID-19. Geelong’s population increased by 14% over the past five years, making

it a far bigger city than Hobart and Darwin. At an SA4 level, it has been the tenth

fastest growing area in the country with only parts of Melbourne, Brisbane and

Sydney seeing bigger percentage increases.

Regional population shifts

Long-term population growth:Regional versus Capital City (2001 - 2019)

Capital City Regional

Source: ABS

While Geelong has done well, other regional Victorian areas within commuting

distance to Melbourne have also seen strong population growth, in particular,

Bendigo, Ballarat and Latrobe-Gippsland.

For Queensland, the continued growth on the Gold Coast and Sunshine Coast has

meant that these areas have increasingly become self-sufficient economies, less

reliant on jobs in Brisbane.

For New South Wales, the regions abutting Greater Sydney, Southern Highlands and

Shoalhaven, Hunter Valley (excluding Newcastle) and Illawarra have all experienced

strong growth.

In Western Australia, Mandurah, the coastal regional area just outside the southern

Perth boundary, has seen population growth just over 7%. These shifts to regional

areas at the edge of capital cities have historically been driven by affordability and

the ability to buy a better home in a nicer suburb but the longer commute to the

city for work has been an issue.

Regional areas have also benefited from additional government spending. Geelong,

for example, benefited from a number of major initiatives including the Geelong

City Deal, in addition to $2 billion allocated in the 2019 Federal Budget for a fast rail

between Melbourne and Sydney, and first home buyer incentives that favoured

regional Victoria.

For the Gold Coast, the construction of the light rail and continued improvements

to the Pacific Motorway are likely to be supporting jobs and population growth.

Biggest increase in population by regional SA4 (2014-2019)

Biggest decline in population by regional SA4 (2014-2019)

Source: ABS

SA4 Areas

Geelong

Gold Coast

Sunshine Coast

Bendigo

Ballarat

Mandurah

Latrobe - Gippsland

Southern Highlands and Shoalhaven

Hunter Valley exc Newcastle

Illawarra

SA4 Areas

Western Australia - Outback (South)

Western Australia - Outback (North)

Queensland - Outback

Northern Territory - Outback

South Australia - Outback

Mackay - Isaac - Whitsunday

Western Australia - Wheat Belt

Far West NSW and Orana

Central Queensland

2014

272,154

564,952

341,640

150,101

155,108

96,632

268,583

146,585

262,919

296,633

2014

126,593

102,015

85,254

101,725

86,785

176,064

138,566

117,258

227,014

2019

310,128

636,117

384,281

162,918

167,552

103,467

286,952

156,601

280,588

314,618

2019

116,642

97,963

82,534

98,674

84,407

173,006

136,928

116,962

226,811

5 Year Change

14.0%

12.6%

12.5%

8.5%

8.0%

7.1%

6.8%

6.8%

6.7%

6.1%

5 Year Change

-7.9%

-4.0%

-3.2%

-3.0%

-2.7%

-1.7%

-1.2%

-0.3%

-0.1%

While many regional areas have experienced strong population growth, the areas that

have declined the most tend to be very isolated. This is likely driven by changes to job

creation in these areas. In Western Australia’s Wheatbelt, for example, the automation

of the agricultural industry and the increasing scale of farming operations have partly

driven declines in employment. Surprisingly, however, it has been one of the strongest

regional performers in terms of house price growth since COVID-19.

In areas with high levels of population growth, it is not surprising that we have seen

strong increases in demand and price growth over the corresponding period.

Tasmania has been an exception, despite not having particularly strong population

growth, Tasmania’s house prices grew significantly. Price growth was driven

primarily by a property investment boom, as well as rising wealth from strong

improvements to the Tasmanian economy.

Strongest price growth SA4s (2014-2019)

Source: realestate.com.au

COVID-19 has led to a significant change in the way that property seekers search

on realestate.com.au and it was one of the earliest indicators that there was a shift

in preference to regional Australia.

While search activity dropped dramatically in the early weeks of the pandemic,

once the third stimulus package was announced, particularly JobKeeper, we started

to see buyer activity return nationally. Interestingly, the change in views per listing

was higher in regional Australia than it was in capital cities.

Anecdotally, discussions with agents in many regional areas around this time also

backed this up. Buyer interest was far stronger than expected.

The standout performer in terms of property seeker activity on realestate.com.au

has been Canberra where search activity has more than doubled, likely driven by

very strong growth in government employment.

Beyond this, in every state, regional search has grown stronger than capital city

search. The most striking differential has occurred in locked down Victoria where

search has barely moved in Melbourne while it jumped 60% in regional Victoria.

Change in views per listing (Mar - Sept 2020)

COVID-19 sparked two distinct trends in regional Australia. The first is the

resurgence of the mining sector and the second is the change to the way many

are working. The strength in mining is being driven primarily by the stimulus that

the Chinese Government has deployed to get their economy moving again, as well

as the impact of COVID-19 on other mineral producing countries.

Brazil is the second highest iron ore producer and is also the second most

COVID-19 impacted country, which has substantially reduced the nation’s

production. As a result, iron ore prices have recently hit record highs and Australia

is currently exporting record levels of iron ore.

Other minerals are also seeing strong demand. Gold, often seen as the ultimate

hedge against recession, has hit various price records since mid-March, while

copper is doing well off the back of China using less copper scrap.

Any regions that have economic growth closely tied to these strong performing

minerals are seeing a flow on to house price growth. As an aside, one mineral that

isn’t doing so well is coal and any regional areas closely tied to coal are not

experiencing the same resurgence in their economies.

The resurgence of mining has created interesting results across a range of metrics

that we track on realestate.com.au. Port Hedland in Western Australia now achieves

the highest enquiry from first home buyers in regional Western Australia and is the

second most enquired area from investors.

The trends emerging as a result of COVID-19

Townsville has seen some of the strongest price growth since COVID-19 in

Queensland, likely driven in part at least, by better performance of nearby mines.

Orange, where surrounding expansions of several mines has created many new

jobs, continues to appear as one of the most enquired areas from first home buyers

and investors.

While mining has created positivity in many regional areas, a more surprising shift

has been movement, which appears to be coming from people working differently

and wanting more space due to COVID-19 restrictions.

As outlined earlier, there has been a shift to regional areas over recent years as a

result of affordability. Moving to cities like Wollongong and Geelong means more

expensive housing than in many other regional parts of Australia, but they are

within convenient commuting distance to many capital cities so have been popular.

The main difference since COVID-19 is that many of the regional areas seeing

jumps in popularity and pricing are not within an easy commute.

The most dramatic change has been seen in Bangalow in northern NSW. This

suburb is now in the top 10 nationally in terms of views per listing. It is the first time

a regional town has appeared in this list since we started tracking views per listing

five years ago. More broadly, Richmond-Tweed is one of the strongest performing

regional areas nationally in terms of activity on realestate.com.au and that has

translated into price growth.

In Western Australia, Margaret River receives the second highest level of first home

buyer enquiry regionally after Port Hedland, while Cable Beach is in the top three

for investor enquiry in regional Western Australia.

Warrnambool and surrounding towns have experienced the strongest price growth

of all regional areas in Victoria over the past three months.

Illawarra

Southern Highlands and Shoalhaven

Richmond - Tweed

Ballarat

Newcastle and Lake Macquarie

Gold Coast

Bendigo

Coffs Harbour - Grafton

Sunshine Coast

Central West - NSW

1

2

3

4

5

6

7

8

9

10

New South Wales

Bangalow NSW 2479

Thirroul NSW 2515

Bulli NSW 2516

Victoria

Jan Juc VIC 3228

East Geelong VIC 3219

Belmont VIC 3216

Queensland

Tugun QLD 4224

Burleigh Heads QLD 4220

Witta QLD 4552

South Australia

Port Elliot SA 5212

Goolwa Beach SA 5214

Cockatoo Valley SA 5351

Western Australia

Yallingup WA 6282

Cookernup WA 6219

Yallingup Siding WA 6282

Tasmania

Trevallyn TAS 7250

West Launceston TAS 7250

Launceston TAS 7250

Northern Territory

Braitling NT 0870

Araluen NT 0870

East Side NT 0870

Median house price

$1,050,000

$1,380,000

$1,070,000

$933,000

$740,000

$580,000

$710,000

$856,500

$620,000

$482,500

$317,500

$645,000

$1,652,500

N/A

$1,350,000

$406,500

$410,000

$470,000

$450,000

$505,000

$505,000

Average views per listing

11,451

10,785

9,181

7,056

6,689

6,416

7,137

6,363

6,101

3,715

3,676

3,110

2800

2757

2019

5232

4984

4589

850

817

813

The first COVID-19 lockdown began in March 2020 and the areas that have seen

the biggest jump in viewing activity are a mix of regional areas that were doing

well prior to the lockdown such as Illawarra, Gold Coast and Bendigo, all located

adjacent to capital cities, as well as some new areas.

Richmond-Tweed was a popular area prior to the pandemic, particularly with

renters, but is probably the region that has most benefited from the lifestyle shift

of white-collar workers being able to work anywhere.

It is likely that Coffs Harbour-Grafton is benefitting from a similar shift. The

announcement of the Coffs Harbour bypass in this year’s Federal Budget, will

further benefit this part of New South Wales. Newcastle and Lake Macquarie do

have a mining sector, however, it is reliant on coal, which is one of the minerals that

isn’t seeing buoyant demand. As a result, the increase in popularity is likely due to

lifestyle, similar to Coffs Harbour-Grafton and Richmond-Tweed.

In contrast, the rise of Central West New South Wales is likely to be in part driven

by mining with gold mining a major employer in this part of the state.

At a suburb level, the popularity of lifestyle areas becomes more obvious.

Bangalow is a good example and in other states, the trend continues. Seaside Jan

Juc in Victoria, Gold Coast’s Tugun, South Australia’s Port Elliot, and Western

Australia’s Yallingup all offer great beaches and are popular holiday destinations.

Only Tasmania (Launceston’s Trevallyn) and Northern Territory (Alice Spring’s

Braitling) are not likely to be driven so much by this lifestyle shift.

The areas set to benefit as demand soars

Highest views per listing by suburbs in regional Australia, post COVID-19 (Apr - Sep 2020)

Source: realestate.com.au Note: Median house price is 12 months to September 2020

Change in views per listing (Mar - Sep 2020)

Highest enquiry from First Home Buyers in regional Australia, post COVID-19 (Apr - Sep 2020)

New South Wales

Wollongong

Orange

Dubbo

Victoria

Belmont

Wodonga

Mildura

Queensland

Surfers Paradise

Coomera

Southport

South Australia

Mount Gambier

Murray Bridge

Port Lincoln

Western Australia

South Hedland

Margaret River

Australind

Tasmania

Devonport

Newnham

Summerhill

Northern Territory

Gillen

Larapinta

Katherine

Type

Unit

House

House

House

House

house

Unit

House

Unit

House

House

House

House

House

House

House

House

House

House

House

House

Since the beginning of COVID-19 lockdowns, first home buyers have been a

positive part of the market with overall enquiry showing strong increases despite

rising unemployment. A big driver of this has been high levels of government

incentive. At a federal level, this includes the First Home Buyer Deposit Scheme and

HomeBuilder. At a state level, many incentives have been extended and/or

expanded. In some states, these incentives are more generous in regional areas

than they are in capital cities.

Enquiry from first home buyers in regional Australia on realestate.com.au has been

consistent with the rest of the market, albeit at cheaper price points. Trends that

were occurring prior to the pandemic have continued. These include the popularity

of the Gold Coast, Wollongong and Geelong. Featuring strongly are beachside

areas including Port Lincoln, Devonport and Margaret River.

More interesting, are inland towns where it is difficult to commute to a capital city.

Orange and Dubbo are both large regional cities and are likely to be driven in part

by mining, better performance in the agricultural sector (breaking of the drought)

and a lifestyle shift. For Mildura and Wodonga, it is likely to be agriculture (Mildura)

and perhaps defence (Wodonga).

Beaches and mining driving First Home Buyer enquiry

Median price

$557,000

$445,000

$375,000

$580,000

$345,500

$330,000

$390,000

$538,500

$350,000

$269,000

$230,000

$297,500

$199,500

$471,000

$360,000

$296,500

$315,000

$357,500

$427,500

$405,000

$300,000

Source: realestate.com.au Note: Median house price is 12 months to September 2020

While first home buyers remain very active, investor demand has been far more

subdued for a long time, pretty much since the Financial Services Royal

Commission kicked off at the end of 2017. For regional Australia, there are a lot of

similarities between the locations which investors and first home buyers are making

the most enquiries on. Orange, Mildura, Surfers Paradise and South Hedland are all

examples of towns that feature in both lists.

Job creation is generally the driver for investor and first home buyer enquiry so it’s

not surprising that the same areas attract both. First home buyers need affordability

given they are generally younger and in the early stages of their careers. They also

need an income and regional areas with lots of new jobs are attractive. Similarly,

rental demand is generally stronger in areas with a lot of job creation, so these

areas also become attractive to investors.

Given the rising popularity of the Richmond-Tweed region, it’s unremarkable that

Byron Bay is the third most enquired upon area in regional New South Wales.

This is despite a median house price now over $1.5 million.

Lower prices drive demand from Investors

Source: realestate.com.au Note: Median house price is 12 months to September 2020

Highest enquiry from Investors in regional Australia, post COVID-19 (Apr - Sep 2020)

New South Wales

Orange

Wollongong

Byron Bay

Victoria

Mildura

Shepparton

Wodonga

Queensland

Surfers Paradise

Mooloolaba

Southport

South Australia

Mount Gambier

Port Pirie

Murray Bridge

Western Australia

Dunsborough

South Hedland

Cable Beach

Tasmania

Devonport

George Town

West Launceston

Type

House

Unit

House

House

House

House

Unit

Unit

Unit

House

House

House

House

House

Unit

House

House

House

Median price

$445,000

$557,000

$1,568,000

$330,000

$285,000

$345,500

$390,000

$920,000

$350,000

$269,000

n/a

$230,000

$630,000

$199,500

$162,000

$296,500

$200,000

$410,000

Strongest price growth by regional SA4 (3 months to Sep 2020)

New South Wales

Coffs Harbour - Grafton

Mid North Coast

Richmond - Tweed

Victoria

Warrnambool and South West

Ballarat

North West

Queensland

Townsville

Gold Coast

Wide Bay

South Australia

South Australia - Outback

South Australia - South East

Western Australia

Western Australia - Wheat Belt

Bunbury

Mandurah

Tasmania

Launceston and North East

South East

Median price

$543,500

$527,000

$680,000

$349,000

$440,000

$255,000

$327,000

$700,000

$330,000

$222,500

$310,000

$352,000

$405,000

$378,250

$375,000

$431,000

While search in regional Australia started accelerating soon after the first lockdown

began in mid-March, it has taken some time to work out whether it was just people

locked down, looking for something to do, or alternatively, active purchasers, with

strong intent to buy.

Price growth data now available is starting to confirm that the search activity we

were seeing on realestate.com.au was from genuine buyers looking to make the

move to beachside areas, far from capital cities.

The strongest growth area nationally over the past three months has surprisingly

been the Western Australia – Wheatbelt. As outlined earlier, this is an area that has

seen one of the biggest declines in population over the past decade. Over the past

three months, this area has seen an 11.7% increase in median house prices, likely

driven primarily by copper (the Caravel copper project is the largest in Western

Australia), as well as gold and iron ore.

The preference for lifestyle locations becomes particularly apparent in the list of

New South Wales regional areas seeing the strongest growth. The coastal areas

from the Mid North Coast up to the Queensland border have been experiencing

strong growth post the pandemic, likely driven by strong interest from people

located in capital cities, particularly Sydney.

Mining regions and beachside areas, far from capital cities, are now dominating price growth QoQ % change

8.7%

8.3%

6.3%

5.8%

4.8%

4.1%

3.8%

3.2%

3.1%

4.7%

1.3%

11.7%

5.2%

2.2%

4.0%

2.1%

Source: realestate.com.au Note: The states with less than three SA4s did not have any other SA4s with positive price growth over the quarterMedian Sale Price: Median sale price in the last 3 months QoQ % change: Percentage difference between the median sale price in the last 3 months compared to the same period 3 months ago

It's important to look at the areas that have seen the strongest price growth in

regional Australia over the very long term. Although, we believe change in search

and enquiry on realestate.com.au is a good indication of potential price growth,

analysing other factors is critical.

Australia’s strong shift to beachside living is apparent from this data, and this trend

has also showed up in the equivalent capital city data. Bangalow, which has been

the standout performer in terms of search, has also been the standout in price

growth over the long term. The median house price is currently just over $1 million,

which is an increase of 1281% over the 20-year time period.

Elsewhere around Australia, similar beachside trends emerge. Barwon Heads in

Victoria, Sunshine Beach in Queensland and Middleton in South Australia. In

Western Australia, it is the mining town of Newman.

Long term growth

Source: realestate.com.au Note: Median house price is 12 months to September 2020

Strongest price growth by regional suburbs (Sep 2000 - Sep 2020)

New South Wales

Bangalow NSW 2479

Fletcher NSW 2287

Glenroy NSW 2640

Victoria

Barwon Heads VIC 3227

Indented Head VIC 3223

Kyneton VIC 3444

Queensland

Sunshine Beach QLD 4567

Moffat Beach QLD 4551

Mudjimba QLD 4564

South Australia

Middleton SA 5213

Port Elliot SA 5212

Sellicks Beach SA 5174

Western Australia

Newman WA 6753

Bridgetown WA 6255

Katanning WA 6317

Tasmania

Invermay TAS 7248

South Launceston TAS 7249

Launceston TAS 7250

Northern Territory

East Side NT 0870

Gillen NT 0870

Braitling NT 0870

2000

$76,025

$69,000

$47,750

$145,000

$85,000

$92,500

$290,000

$162,500

$140,000

$107,500

$100,000

$83,000

$61,100

$104,500

$55,000

$60,000

$70,000

$95,500

$153,750

$143,200

$155,000

2020

$1,050,000

$624,000

$401,500

$1,050,000

$605,000

$635,000

$1,950,000

$945,000

$790,000

$540,000

$482,500

$375,000

$225,000

$371,000

$179,500

$330,428

$349,000

$475,000

$505,000

$427,500

$450,000

% change

1281%

804%

741%

624%

612%

586%

572%

482%

464%

402%

383%

352%

268%

255%

226%

451%

399%

397%

228%

199%

190%

While search, views and enquiry data on realestate.com.au gives us a good idea

as to how preferences are changing at a suburb and regional basis and this

frequently flows through to pricing, similar data at a street level often just shows

up beautiful streets in desirable suburbs. Most of the streets on the list also contain

luxury homes.

The most popular streets in regional Australia

Highest views per listing for Regional Australian streets (SEP 2017 - SEP 2020)

New South Wales

Tobins Rd

Chichester Dam Road

Owenia Way

Victoria

Old Beech Forest Rd

Mcivors Rd

Great Ocean Rd

Queensland

Beachfront Mirage Dr

Amamoor Creek Rd

Andersons Rd

South Australia

Broadbent Rd

Horrocks Hwy

Signal Flat Rd

Western Australia

St Alouarn Pl

Balingup-nannup Rd

Song Pl

Tasmania

Winduss Rd

Kingsway

Myalla Rd

Northern Territory

Ilparpa Rd

Emungalan Rd

Wooliana Rd

Suburb

Mandalong NSW 2264

Bandon Grove NSW 2420

Broken Head NSW 2481

Beech Forest VIC 3237

Kilmore VIC 3764

Big Hill VIC 3231

Port Douglas QLD 4877

Amamoor Creek QLD 4570

Black Mountain QLD 4563

Paris Creek SA 5201

Gillentown SA 5453

Ashbourne SA 5157

Margaret River WA 6285

Nannup WA 6275

Perup WA 6258

Gunns Plains TAS 7315

Launceston TAS 7250

Myalla TAS 7325

White Gums NT 0870

Emungalan NT 0850

Daly River NT 0822

QoQ % change

8555%

6695%

5975%

6882%

5556%

5163%

8088%

6178%

6017%

5684%

3828%

3785%

4966%

4456%

3908%

6148%

5417%

5261%

2198%

1434%

1273%

Source: realestate.com.au Note: The states with less than three SA4s did not have any other SA4s with positive price growth over the quarterMedian Sale Price: Median sale price in the last 3 months QoQ % change: Percentage difference between the median sale price in the last 3 months compared to the same period 3 months ago

It is the changes to the way we work and a resurgence in the mining sector that are

driving a big push into regional areas. While the regional areas adjacent to capital

cities have been popular prior to COVID-19, it is the more far flung areas that seem

to have benefitted most from the pandemic.

In summary, the main beneficiaries have been:

Areas adjacent to capital cities

•Victoria – Geelong, Bendigo, Ballarat, Latrobe-Gippsland

•New South Wales – Illawarra, Southern Highlands and Shoalhaven, Hunter Valley

•Western Australia – Mandurah

•Queensland – Gold Coast and Sunshine Coast

•South Australia – Port Elliot and surrounding region

Remote areas

•Victoria – Warrnambool and the South-West, Mildura and Wodonga

•New South Wales – Central West (particularly Orange) and coastal areas from

Mid North Coast up to the Queensland border

•Western Australia – all mining regions and Margaret River region

•South Australia – Mount Gambier and the South-East

•Tasmania – Launceston and the North East

•Queensland – all mining regions (excluding coal)

The information contained in this report is current as at the publication date only. The median sales information is based on Third Party Content (within the meaning of our website terms of use). realestate.com.au Pty Ltd does not make any warranty as to the accuracy, completeness or reliability of the information or accept any liability arising in any way from any omissions or errors.The information should not be regarded as advice or relied upon by you or any other person and we recommend that you seek professional advice before making any property decisions.

In summary