An email from his property manager was the “final nail in the coffin” for Ben Fraser, who was considering a major life decision.
A few months ago, a friend sent him a link to a five-bedroom house for sale with a guide price of about $1 million. The house was in Lake Macquarie, a four-hour drive north of Sydney.
Ben and his wife Lauren had been lifelong Sydneysiders, were expecting their second child and were already spending about half their combined income renting a house in the city’s north.
When they received notice that their rent was about to go up again, they decided it was time to move out of town and escape the “rent rut.”
“We came to the realisation that there was no way we would ever be able to afford anything more than a small unit in Sydney, which was not possible with a young family,” Ben said.
“It’s the cost of living and the cost of property that will drive more and more people of my generation out of Sydney.”
Second wave of migration from major cities
Median house prices in Lake Macquarie have risen by about 61 per cent in the past five years to $925,587, according to CoreLogic data – still well below the average Sydney house price of $1.4 million.
While housing affordability was a major motivator for Ben and Lauren, the move was also made possible for the Frasers because they both have flexible work arrangements — one of the few positives to come out of the pandemic.
These two factors—affordable housing and the ability to work from home—are likely to lead to a “second wave” of internal migration, primarily made up of millennials.
“People are being pushed out of the city centres in particular because of rising prices, so we are seeing more people looking to the outer suburbs and regional markets again,” said CoreLogic’s Eliza Owen.
“It feels like a second wave of this push from the capitals.
“But this time it’s not because of lockdowns, it’s because of affordability constraints.”
Search from The Regional Australia Institute (RAI) has found that the number of city dwellers moving to the regions has reached its highest level in 12 months.proving that “societal transformation is underway.”
“This population movement cannot be dismissed as just a freak effect of years of lockdown,” said the company’s chief executive, Liz Ritchie.
Secondary cities outperform their capital counterparts
For people already living in rural Australia, there is a downside to this shift.
Over the past five years, property values in the areas have risen by 58.6 percent, compared to a 45.8 percent increase in capital markets.
This has been felt most acutely in Queensland, where more than 50,000 people (mostly from Victoria and New South Wales) moved during the height of the COVID-19 pandemic in search of more sunshine and space.
This “demand shock” has seen the average price of homes and units on the Sunshine Coast, which includes Noosa, rise by 70 per cent to more than $1 million.
The Gold Coast, another popular lifestyle market, is not far behind, with an average price of $994,025 — up 79% since 2019.
Across Australia, Real estate prices are growing in these “secondary cities” These companies have significantly outperformed their venture capital peers over the past five years.
There is a clear effect: when people move to a particular area, housing prices rise not only in that area and surrounding areas, but also further afield. This can displace existing residents, especially renters, as competition in the market increases.
Brisbane is now the country’s second most expensive capital city, and two hours west, property prices in Toowoomba have risen by nearly 64 per cent in the past five years.
Australia’s migration patterns ‘changing again’
Amid a political debate about housing affordability, Michael Fotheringham of the Australian Institute of Housing and Urban Research said that “internal mobility is overwhelmingly what is driving up house prices in regional areas”.
After the pandemic, high housing prices in the regions began to decline as people returned to the city. But this has led to higher housing prices in the capital, making the regional housing market more attractive again.
“It was a back-and-forth between prices and demand,” Dr. Fotheringham said.
“We’re still in the recalibration phase. It’s probably going to be a few more years before we can figure out where people actually want to live and where they can get affordable housing.”
The Frasers have found that at Lake Macquarie, where they love the parks, the proximity to the water and ultimately the “vibe”.
Although they miss having both parents living close by in Sydney, and the endless choice of restaurants to choose from, they’re not looking back.
“We now have space for our grandparents to visit us and stay a night or two,” Ben said.
“There are definitely pros and cons, but when we weighed it up, we found that we are very happy with this decision and would not change a thing.”
