Sydney and Melbourne lost 245,000 people last year, which could have long lasting ramifications for the property market in both cities.
Regional Australia grew by 51,000 people in the same time, with the tree and sea change effect going into overdrive since Covid struck.
The pandemic accelerated a trend that has been in place for decades, with work from home and first home buyer subsidies smashing the regional market as people depart from Melbourne and Sydney.
“That pattern has been in place for literally decades,” said Simon Pressley of Propertyology, who compiled the statistics.
“Every single year, even before Covid, more Australians leave our capital cities for different corners of Regional Australia than go the other way.”
“That’s a fact that most people aren’t aware of. Even in the last five years, of which Covid has only been 12 months, 145,000 people net left the capital cities left capitals for regional Australia.”
“Both Sydney and Melbourne, in most years, are the biggest beneficiaries of overseas migration. With international borders closed, they haven’t had that, and in fact, there’s been some people that were originally born overseas but based in Australia who left when Covid arrived.”
“Usually, they gain around 70,000 people a year from overseas migration and they’re not getting that, but the other component is internal migration – existing Australian residents who for a variety of reasons move from one part to another.”
“Every year for as long back as official data goes, Sydney loses roughly 20,000 people to internal migration, but that has increased to 32,000 in the first 12 months of Covid.”
“Melbourne’s annual population is usually very neutral with internal migration, plus or minus 1-2000 per year, but this year they lose 32,000 as well. That’s largely because it is now to be the city that has been locked up more than any other in the world.”
The kick on from these annual population shifts has been that the property market in Australia is weakest in the inner cities of Sydney and Melbourne and strongest in regional areas.
“We’ve been on record and publish a whole heap of reports, well before Covid, that show that while population growth is a factor in property prices, it’s never ever been the biggest factor like everyone else on the planet thinks it is,” said Pressley.
“Now, we’re two years into the second biggest property boom in Australian history at the same time as we have our lowest annual population growth in 100 years is proof of what we’ve always said.”
“While it isn’t the biggest factor, population growth is a factor. Specifically in Sydney and Melbourne, a swing of 245,000 people is not a minor change. It’s an enormous change from what Sydney and Melbourne are accustomed to compared to what has been seen.”
“The data only goes back to March, and the two cities have been in a hard lockdown for several months since then, so logic would dictate that population is falling even further.”
“The bigger question is not so much that they have lost population, but why are they losing them? That’s the most concerning thing to us. The psychological impact of lockdowns, and the job loss impact, is going to be a legacy that is, sadly, going to be around for a long, long time to come.”
“We couldn’t rule out property prices in Sydney and Melbourne declining in the not-too-distant future.”
“People would be foolish to get caught up in the current market, where you can go to an open home and the property price was $100k up on last year. Things change and people need to focus on the influencing factors behind the scenes.”
