Has Covid-19 caused an exodus from cities to regional areas?

Has coronavirus prompted people to leave the big smoke for suburbia, smaller regional centres and country towns? 

Anecdotal evidence and newspaper headlines seem to suggest this, but we wanted to take a look at the data to see if these claims stack up. 

COVID impacts working life

The pandemic has already transformed where we work, with the shift to working from home becoming a defining trend of 2020.

A recent NBN commissioned Behavioural Change Survey found that 67 per cent of respondents, 'expect to work from home more after the COVID-19 crisis has ended' - an indication that this could be the new norm, and at the very least, more accepted by employers and employees. 

This could have a knock-on effect - as leading property data analysts CoreLogic point out back in July 2020, stating that 'As employers and employees adapt to remote working conditions, physical proximity to a workplace may become a less important factor in home purchases.'

As people adapt to remote working conditions, physical proximity to a workplace may become a less important factor in home purchases

But is there more at play here than just the perceived safety of regional centres?

Regional pull factors

At its most simplistic the 'pandemic-push' theory is that people are moving away from crowded urban centres, where the virus has tended to spread due to higher population densities. 

This does however ignore other pull factors in favour of regional centres, including a slower-paced lifestyle and the relative affordability of regional property. This last point is increasingly compelling, when the typical house in regional NSW ($481,513) is less than half the price of a Sydney house, with a similar scenario for apartments. This has already prompted Aussie homebuyers to flock to suburbia and regional centres.  

But will COVID have the same impact on where we want to live? Before we look at what is happening locally, it is worth touching on some international locations, for an insight into what trends are being seen there. 

An exodus from the cities: a global perspective

In the USA, data from real estate listing website realtor.com saw searches in suburban zip codes grow 13 per cent in May 2020, which was double what was recorded in urban areas over the same timeframe.

The site does point out that interest in suburban postcodes is not new, but rather it has, '...become more pronounced' post-COVID.

Data from online moving marketplace HireAHelper recorded a spike in people moving out of large metro areas - such as in Washington D.C., San Francisco, New York and Los Angeles. These people were moving to, 'small and medium-sized cities' - what we would call regional centres here in Australia.

Property investment start-up Home Buyer Louisiana, who are active throughout the Greater New Orleans area, have seen a similar trend - with people selling city parish properties with a view to moving somewhere quieter and less densely populated. Meanwhile real estate agents in the UK reported a spike in city dwellers from London and Birmingham looking for new homes in more isolated locations.

Let’s now look at the data to see if this scenario is playing out in Australia.

Regional areas growth has been outstripping capital cities 

CoreLogic reports that in recent months there has been an, 'upswing in regional market performance, while capital cities have for the most part trended downwards.'

Their data shows regional centres recording higher capital growth than metro regions over the June 2020 quarter. Realestate.com.au also reports that search activity and buyer demand in NSW regional centres has, ‘accelerated since COVID-19’.

CoreLogic data indicates that the best performing markets for houses over the past 12 months to July 2020 for highest yearly growth are regional - with the Illawarra (NSW) up +12.0 per cent, which also recorded the highest growth in sales volume (+14.0 per cent).

The regional Victorian centre of Ballarat was also a strong performer, recording the shortest days on market nationally - 30 days - and lowest vendor discount (-2.4 per cent) over this timeframe. 

It's a similar tale for the best performing markets for units, with the highest yearly growth recorded in Launceston and North East, Tasmania (+14.8 per cent), which also recorded the shortest days on market (26 days). 

The bottom line

It's too early to tell if COVID is going to have a long lasting impact on urban/rural migration. In the first instance - and at the time of writing - the pandemic is still ongoing. Social distancing requirements could further entrench the working from home phenomenon, which could mean it's less important for some jobs to be located in cities. But demographic shifts will take longer to play out and surface in the data.

The upside for regional markets is that they could see an uptick in buyer interest, investment and property sales - though back in July, CoreLogic cautioned that, ‘the broad-based impact to housing demand from the pandemic could see prices fall in regional centres over the second half of 2020.’ But for now, the trend is certainly looking positive.