Is migration exacerbating regional Australia’s supply crunch?

Do the nation’s regional hotspots have enough housing to cater to increasing demand?

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Regional movement, one of the dominant Australian trends of the COVID-19 era, is set to continue in the post-pandemic world, but what does that mean for the regions that are seeing an influx of people?

Toby Sandell is a property partner at The Agency in Toowoomba, which reported a 96.3 per cent increase in internal migration from 2021 to 2022. That accounted for 5.6 per cent of national regional-to-regional migration and 3 per cent of total Australian internal migration, according to the Regional Australia Institute’s Regional Movers Index (RMI) for the December 2022 quarter.

Speaking on his local market, Mr Sandell explained, “It is acutely understocked with a disproportionate amount of buyers to sellers, driven by a lower price point and a tight rental market.” 

Mr Sandell said a large portion of Toowoomba’s newest residents arrived north from NSW and Victoria, where they’re “priced out of the market,” and attracted to the “Garden City” because of its lifestyle and affordability.

“Toowoomba is a quality town to live in and it is a cheaper alternative to the likes of Brisbane,” he said. “Not everyone wants to live by the water.” Adding to the town’s appeal is its resting point 650 metres, which ensures a calm climate without the humidity notoriously present in other Queensland, as well as several schools, health facilities, and specialist medical services.

But it is not just interstate buyers flooding the town just shy of two hours from state capital, Brisbane, with the agent also reporting an influx of “South-East Queensland buyers who are being priced out of [the] Gold Coast, Brisbane, and Sunshine Coast,” as well as “country buyers from western Queensland selling their farms and retiring or moving professionally to Toowoomba.”

Mr Sandell admits “supply is not keeping up to demand.”

Adding to the area’s supply woes is run-of-the-mill internal movement, as well as an influx of more than 1,000 international migrants. Despite the best efforts of the local council trying to unlock more land, Mr Sandell explained that their efforts are falling short of managing rapidly growing demand, compounded by ever increasing building and development costs, and a scarcity of trades people to conduct projects.

A similar story to Toowoomba is unfolding five hours north in Bundaberg, where, over the last two years, “there has been a big shortage of homes in our area as people have flocked [here] during lockdowns,” according to Ainsley Driver, principal of the town’s McGrath office.

According to the RMI, Bundaberg owns a 3.3 per cent share of total national internal migration due to a 31 per cent increase from 2021. On top of this, the town, located on the coast between the Sunshine Coast and Rockhampton, ended 2022 with the equal-largest share of regional-to-regional migration of any Australian local government area (LGA) at 5.8 per cent.

The primary drivers of this migration activity were people from the Sunshine Coast, Gold Coast, NSW Central Coast, Sydney, and Melbourne, with many citing a “change in lifestyle and work/life balance.”

Mr Driver explained this has shifted slightly with people “relocating back now as lockdowns are finished” — but a constant influx of buyers does remain, thanks to those still seeking out lifestyle or employment opportunities.

Bundaberg is still a relatively affordable city, with a median house price of approximately $350,000, and Mr Driver revealed an evening out of the market has recently occurred.

“We are starting to see rentals become available and more homes starting to come on the market as a lot of homes that have taken one to two years to build or complete [are now becoming occupied] and those property owners who were renting or selling become available.”

In saying this, Bundaberg’s vacancy rate, once between 2 and 3 per cent, currently rests at approximately 0.5 per cent and a “shortage of affordable homes” indicates the region’s supply is struggling to keep pace with demand.

It remains to be seen whether current levels of internal migration can be maintained, especially considering previously described supply constraints, as well as work trends potentially requiring physical presence in the future.

However, signs suggest both regions offer enough to prospective residents.

While to his knowledge, Mr Sandell said there were no new housing developments underway in Toowoomba over the last 12 months, he detailed several industrial projects that could prove enticing.

“The new base hospital is turning soil in the next 18 months and Toowoomba Wellcamp Airport has a contract with Boeing. It is the first location outside of North America where they are building jet combat drones which will bring a more skilled workforce to the area,” he said.

“Cathay Pacific and Singapore Airlines have a freight service going in and out of Wellcamp Airport and there is also the Qantas Group Pilot Academy.”

Meanwhile in Bundaberg, there’s the construction of a new hospital — set to open its doors midway through 2027 — the largest health infrastructure build outside of South-East Queensland, and a $20 million project at the Bundaberg port in the works.

In conjunction with these state government supported schemes, Mr Sandell revealed several land development projects are also underway, with “a number of local developers selling out a lot of their stages across the coast [and] new interest from the south wanting to secure land for development in our area.”

A recent report from property group Hotspotting found regional migration within Australia was present long before the dawn of the COVID-19 pandemic with company director, Terry Ryder, admitting he expects the trend to pivot, but remain.

“I see people making a ‘hill change’ rather than a ‘sea change,” he said, adding buyer motivations such as affordability and lifestyle will remain moving forward, “but in more of a hinterland or country setting.”

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