How city dwellers continue to impact regional areas

A marked increase in net "capital to regional" migration compared to pre-COVID levels could be a trend that's here to stay.

Residz Team 4 min read

How city dwellers continue to impact regional areas

“The Australian population is on the move and in bigger numbers than before the pandemic.” - Regional Movers Index

Major cities don’t suit everyone. They’re expensive, fast-paced, and crowded. So, more people are voting with their feet and leaving Sydney and Melbourne for regional areas.

According to recently-published data, city dwellers continue to move to the regions, with net migration from capitals to regions still averaging 33.1% above pre-pandemic levels.

The Regional Movers Index (RMI) shows most of the people moving to Australia’s more affordable regions came from its most expensive city Sydney, which accounted for 90% of all net capital outflows. This is up from 61% year-on-year.

Net outflows from Melbourne also rose significantly, from 44% to 51% in the 12 months to March 2023.  

And while Sydney and Melbourne account for most of the net outflows, Perth and Brisbane proved popular destinations for movers, recording net inflows of 26% and 24% respectively.

Here we take a closer look at what’s going on in regional migration.

Movers relocating to smaller centres

The COVID-19 pandemic has had a profound impact on the movement of people within Australia, leading to a significant shift in population from cities to regional and rural areas.

According to the Regional Movers Index, a partnership between Commonwealth Bank of Australia and the Regional Australia Institute, the ongoing trend of city dwellers moving out and regional residents relocating to smaller centres is continuing.

The RMI increased by 7.9% in the March 2023 quarter. This lifted the average index slightly above the average reported during the height of the pandemic.

While this migration has brought positive changes to the regions, it has also created challenges such as housing stress and labour shortages.

A significant increase in "capital to regional" migration

The Regional Movers Index shows the increase in net "capital to regional" migration compared to pre-COVID levels could be here to stay.

Despite a small uptick in regional Australians returning to cities, the RMI showed the overall trend indicates a growing number of city dwellers opting for a regional lifestyle.

The most attractive places for city dwellers making the move to the regions were found to be those LGAs on the east coast and proximate to capitals.



Rise in Region-to-Region Migration

In addition to the increase in capital to regional migration, there has been an 8% rise in the number of people moving from one regional centre to another - and it’s now at its highest level since the pandemic began.

Popular destinations for region-to-region migration include Bundaberg, Townsville, and Toowoomba in Queensland.

This migration pattern suggests that some individuals are choosing to leave major regional centres for smaller, more affordable regional areas.

According to the RMI, this "bounce effect" could be attributed to the desire for lower-cost living and improved quality of life.

Shifting Growth Inland

According to The Guardian, the report highlights a significant change in Australia's demographic landscape, with 13 local government areas doubling their net internal migration in the past year.

Notably, nine of these areas are located inland, including the Southern Downs in Queensland, Murray Bridge in South Australia, and Glen Innes in New South Wales.

This inland migration signifies a departure from the traditional coastal concentration of the population. Traditionally, Australia has been a country where 85% of the population lives by the coast.

Implications and challenges

While the shift toward regional areas brings economic benefits, such as increased income from remote working, it also presents challenges.

The influx of city dwellers has led to acute housing stress in major regional hubs.

Dr Laura Crommelin, Senior Lecturer in City Planning at the School of Built Environment, UNSW ARTS, Design & Architecture, says city earners may be able to afford spacious homes in regional areas. But, this has a knock-on effect.

“.....we’re seeing that rapid growth without proper planning can replicate some of the problems we face in urban areas in regional areas, such as housing affordability.”

“So we risk losing features of regional life that are often what attract people to move in the first place,” she says.

This can force current residents out of town altogether, choosing to move to other, more affordable regional areas.

Labour shortages and job vacancies

One of the significant challenges resulting from the influx of city dwellers is the acute shortage of labour in regional areas.

The Regional Australia Institute's chief economist, Dr. Kim Houghton, highlights in The Guardian the record number of job vacancies across regional Australia, particularly in skilled trades and professions.

“Remote working really has pushed things along, and that’s good for regions because it’ll bring income, but it doesn’t fill the jobs that are needed on the ground. In fact, it creates more jobs,” Dr Houghton said.

Some shift to cities

Meanwhile, migration flows in the other direction – from regions back to capitals

– rose by 0.9 per cent to account for a 10.1 per cent share.

The Australian Government’s Centre for Population Studies says relocating is closely correlated to age and key life events. It found educational opportunities, entry into the labour market, and forming of relationships all drive young adults to be the segment of the population most likely to move.

And these life events typically favour moving from regional areas to capital cities.

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