Regional rents soar as people flee cities

Consequently, rent values increased by 9.4 per cent on average, ranging from a boost of 17.6 per cent in New South Wales’ Richmond-Tweed to 2.3 per cent in the state’s capital region.

Average time on market, meanwhile, declined from 25 days in the three months to April 2020 to 17 days in the same period this year. 

The shortest time on market was clocked across Queensland’s Gold Coast, Sunshine Coast and Wide Bay, as well as Tasmania’s Launceston and North East, where it took an average 14 days to find a tenant. 

According to CoreLogic’s head of research, Eliza Owen, the data ultimately suggests that tenants are having to compete harder for rental accommodation in major regional centres, both in terms of their wallet and the pace of their decision-making.

“More severe consequences of the recent tightening in rental markets include housing stress and homelessness,” she added.

Ms Owen unveiled three factors that may have contributed to the rapid tightening of rental markets in regional Australia:

1. Fewer people moving out of the regions 

Over 2020, migration away from regional Australia to capital cities fell to 190,151 — around 4 per cent below the series average, according to data from the Australian Bureau of Statistics (ABS).

“The fall in internal migration may have resulted from work or study plans in the city being disrupted by COVID-19. [This] may have contributed to less rental stock being freed up over the year,” Ms Owen said.

2. More people moving into the regions

While fewer people are moving from regions to cities, the December and September quarter data from the ABS showed an increase in migration from cities to regions, compared with equivalent quarters in 2019.

Along with the tightening of the rental market, rent prices have been under further upward pressure due to regional relocation being largely skewed to higher-income workers, according to Ms Owen. 

“This is because remote work tends to be concentrated in the ‘knowledge economy’, such as for professionals, as well as clerical and administrative workers,” she said.

3. Domestic tourism has been boosted

The boost in domestic tourism brought forth by eased restrictions may have implications for rentals, Ms Owen said.

She explained: “At the onset of the pandemic, where travel and tourism was immediately impacted, anecdotes emerged of short-term rental accommodation owners converting their properties to the long-term rental market.

“However, with domestic travel restrictions eased, such properties are likely to have been re-converted to the short-term rental market.”

Looking ahead, Ms Owen believes that current rental conditions can be eased by creating more affordable housing in both regional Australia and the major cities.

According to her, well-dispersed affordable housing options can also limit internal migration based on affordability constraints. 

“The challenge with supply-side solutions is that they are relatively inelastic in responding to very tight rental markets, especially in regional markets where the pool of labour and materials is often shallower relative to the capitals,” she said.

“But in an environment where government schemes have brought forward demand for private housing, social and affordable housing may also be an important source of activity for the housing construction sector.”

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