New AHURI research has confirmed that population movements, driven by factors like housing unaffordability and the COVID-19 pandemic, create ripple effects on house prices across multiple housing submarkets.
The study, conducted by researchers from the University of Tasmania and Sydney University, explored how internal migration affects house prices both nearby and in distant regions.
Between 2015 and 2020, more than 40% of Australian households moved homes, with many relocating from major cities to regional areas.
This shift saw a decrease of 160,000 people in Australia’s major cities from 2016 to 2021, while regional Australia’s population increased by 184,000.
The trend was partly due to city wages not keeping up with housing costs, leading households to seek more affordable options in suburban and regional areas.
“Our research found that when people move into a particular region, house prices increase not only in that region and close surrounding areas, but they may also rise in other, more distant locations,” said lead research author, Maria Yanotti of the University of Tasmania, in a media release.
“Furthermore, people moving into a region and the consequent house price impacts of that movement may also trigger successive population movements of people moving out of that region.”
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Migration patterns and their impact on house prices changed significantly during the COVID-19 pandemic. Before the pandemic, house price changes in NSW influenced prices in ACT, Victoria, and South Australia, among others.
During the pandemic, stricter restrictions in Victoria made it a significant contributor to house price changes in every other state or territory.
The influx of people into regional cities has worsened housing affordability due to limited stock and low vacancy rates.
Regional areas, traditionally more affordable, are home to many low-income and tenant households now facing rising housing costs.
This regional housing stress could force low-income and vulnerable households to move to less-expensive, lower-resourced areas further from employment hubs.
“Besides targeting policies that provide financial support for households experiencing housing stress in regional areas, policymakers should be aware that policies focused on particular regions can have unintended consequences for nearby regions,” Yanotti said.
“The connectivity that operates across open borders means that migration increases, and house price rises due to a local policy may increase house prices for other regions.”
Long-term regional investment policies need to ensure sufficient and appropriate housing supply and services, including social and affordable housing.
Strategic development of regional and rural areas should include education and employment opportunities to balance pull factors with adequate housing supply, AHURI reported.
For further details, view the full report.
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