There will be winners and losers when it comes to the dramatic change to population movements as a result of the COVID-19 pandemic.
It is important to monitor these changes very closely, because the changes are likely to have a big impact on our markets, as the largest changes to property values are arguably created by population growth.
The Research Behind The Population Movements
Leading property market researcher, John Lindeman, recently put together a study on population growth and interstate movement.
Interestingly, it shows the numbers of people relocating within Australia from one state to another each year has been more than doubling our total population growth, leading to more significant changes in housing markets than growth causes.
"Not only does every moving household increase demand by needing a new home where they move to, but they also leave an empty one behind, increasing housing supply where they move from."
Interstate migration has come to a temporary halt with the state borders closed but is sure to start again when they reopen. There will also be a huge backlog of people who have been anxiously waiting to move, and a large number who have simply decided that it’s time to relocate for other reasons.
Net Interstate Migration
Net interstate figures don't reveal the total numbers of people moving, but it does show the net effect on state and territory populations.
The critical fact is that there are many different types of people moving, and their housing needs are varied.
Last year younger people left Perth, Adelaide and Tasmania in search of employment, education and lifestyle opportunities.
What Will Happen When The Boarders Re-Open?
Large numbers of people will start to move again when the borders are open, and there are likely to be even more of them than before, due to the backlog that has built up this year.
Their destinations will also be different because some cities have become more attractive while others have been tarnished by COVID-19.
More opportunity seekers leaving the western and central states and territories will be attracted to south-east Queensland, and Brisbane, in particular, is about to receive large numbers of young renters when the borders reopen.
There will be a dramatic rise in rental demand in areas they move to, especially inner-urban unit markets.
Young couples and families will leave Sydney in search of more affordable housing and are likely to head for first home buyer areas in Brisbane and the Sunshine Coast. This means that prices in the newer outer suburban areas of these cities are likely to rise, especially first home buyer locations.
Potential retirees will also be on the move again from southern cities and both Tasmania and south-east Queensland will be the beneficiaries.
"By investing in areas that are likely to benefit most from interstate migration we will get a strong head start on the price growth and rental demand to follow. This is because these interstate movements will begin well before our international borders reopen."
The areas that will benefit are likely to be the same as those favoured by overseas arrivals when they start arriving later next year.
This graph below illustrates how net interstate migrations could pan out once borders are open again, with Queensland and in particular Brisbane and the Sunshine Coast being the big winners.
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Adam Duffy - Partner at Meridian Australia
P: (02) 9939 3249
Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your individual circumstance.