An email from his property manager was the “final nail in the coffin” for Ben Frazer, who’d been mulling over a major life decision.
A few months earlier, a friend had sent him a link to a five-bedroom house for sale with a price guide around the low $1 million mark. It was in Lake Macquarie, about a four-hour drive north of Sydney.
Lifelong Sydneysiders, Ben and his wife Lauren had a second baby on the way and were already spending about half of their combined income renting a townhouse in the city’s north.
When they received notice that their rent was about to be increased again, they decided it was time to move out of the city and escape “the rental rut”.
“We came to the realisation that there’s just no way we’d ever be able to afford to buy anything more than a small unit in Sydney, which, with a young family, is unfeasible,” Ben said.
“It’s the cost of living and cost of property that’s going to lead more and more people of my vintage to leave Sydney.”
‘A second wave’ exodus from the big smoke
Median house prices in Lake Macquarie have increased by about 61 per cent in the past five years to $925,587, according to CoreLogic data — still well below Sydney’s median house price of $1.4 million.
While housing affordability was a key motivator for Ben and Lauren, the move was also made possible for the Frazers because they both have flexible work arrangements — one of few positives to emerge from the pandemic.
These two factors – affordable housing and the ability to work from home — are triggering a “second wave” of internal migration, and it’s mainly millennials on the move.
“People are being priced out of inner-city areas in particular so you’re seeing more people look to outer suburban and regional markets, once again,” CoreLogic’s Eliza Owen said.
“It’s almost like a second wave of this push from the capital cities.
“But this time it’s not because of lockdowns, it’s because of affordability constraints.”
Research from the Regional Australia Institute (RAI) has found the number of city-dwellers moving to the regions has hit a 12-month high, proving “a societal shift is underway.”
“This movement in population can no longer be seen as a quirky flow-on affect from the lockdown years,” CEO Liz Ritchie said.
Secondary cities outpacing capital city counterparts
For people already living in regional Australia, there is a downside to this shift.
In the past five years, property values in the regions have increased by 58.6 per cent, compared with a 45.8 per cent increase in the capital city markets.
It’s being felt most acutely in Queensland where more than 50,000 people (mainly from Victoria and New South Wales) moved to during the peak of the COVID pandemic seeking more sunshine and space.
This “demand shock” has seen the median price of houses and units on the Sunshine Coast, which includes Noosa, surge by 70 per cent to over $1 million.
The Gold Coast, another popular lifestyle market, is not far behind with a median price of $994,025 – a 79 per cent increase since 2019.
Across Australia, property price growth in these “secondary cities” have largely outstripped their capital counterparts over the past five years.
There’s a clear flow-on effect: when people move to a particular region, house prices increase not only in that region and the surrounding area, but also in more distant locations. This has the potential to displace existing residents, particularly renters, as the market becomes more competitive.
Brisbane is now the second-most expensive capital city in the country, and two hours west, property prices in Toowoomba have surged nearly 64 per cent in the past five years.
Australia’s migration patterns ‘recalibrating’
In the midst of a political debate about housing affordability, Michael Fotheringham from the Australian Housing and Urban Research Institute said it was “overwhelmingly” internal movement that’s pushing up house prices in the regional areas.
After the pandemic, high house prices in the regions started to ease as people drifted back to the city. But this saw capital city house prices climb, which in turn made the regional housing market more attractive once again.
“It’s been a boomerang, back and forth, with both prices and demand,” Dr Fotheringham said.
“We’re still recalibrating. It’ll probably be another few years before we work out where people actually want to live and where people can get housing that’s affordable to them.”
The Frazers have found that in Lake Macquarie, where they’re loving the parks, the proximity to the water and ultimately “the vibe”.
While they miss having both sets of parents living just down the road from them in Sydney, and an endless selection of restaurants to choose from, they’re not looking back.
“We’ve now got space for the grandparents to visit us, and stay a night or two,” Ben said.
“There are certainly pros and cons but when we weighed it up, we’re very happy with the decision and wouldn’t change anything.”