Regional rents skyrocket as residents leave capital cities

Talking points

  • A report has found regional rents jumped 18 per cent over the first two years of the pandemic, with internal migration a key driver.
  • Government data shows 244,000 people moved from cities to the regions over the first year of the pandemic (to March 2021), compared with 230,000 the previous year.
  • More people moving to the regions has also meant vacancy rates have tightened, adding to pressure on people on low incomes or homeless due to the floods.

More Australians are leaving capital cities for the bush than before the coronavirus pandemic, contributing to a jump in regional rents that experts warn will put people at greater risk of homelessness without government action.

Australian Council of Social Service (ACOSS) chief executive Cassandra Goldie said COVID-19 and the floods in Queensland and NSW had only aggravated the national rental problem.

Regional rental prices have increased at a greater rate than capital city rates over the course of the pandemic.Credit:Peter Rae

“We’re in the middle of a renting crisis in many parts of regional Australia,” she said.

“In flood-affected areas, it’s clear the rental market cannot house the families on low and middle incomes who have been made homeless temporarily. The real concern is that this then becomes permanent.”

A report from ACOSS and UNSW Sydney’s poverty and inequality partnership found that for the most part, house prices and rents had been inflamed rather than subdued over the first two years of the pandemic.

But it showed that by the end of last year, capital city rents had returned to pre-pandemic levels while those in the regions had risen 18 per cent over the same period.

In NSW, regional rental asking prices increased 17 per cent while they fell 2 per cent in Sydney. In Victoria, rents rose 15 per cent in the regions and dropped 7 per cent in Melbourne.

Mission Australia chief executive Sharon Callister said the organisation was continuing to see people in low-paid, insecure work unable to afford necessities including housing.

“This report confirms that, just like other countries, it has never been so difficult to find an
affordable home to rent in Australia – particularly in our regional areas,” she said.

“The end of the temporary increases to income support and the rapidly increasing affordability pressures are putting people at greater risk of homelessness.”

Internal migration had been a key driver of rising rents, the report said.

Data from the federal government’s Centre for Population shows 244,000 people moved from cities to the regions over the first year of the pandemic (to March 2021), compared with 230,000 the previous year.

Melbourne lost more residents than Sydney for the first time, with a net loss of 32,200 people compared to 31,600 in Sydney. People leaving Melbourne were most likely to move to regional Victoria, while fewer people moved from the regions to the capital over the same period.

More people moving to the regions has also meant vacancy rates have tightened.

Nationally, the residential rental vacancy rate has fallen from 2 per cent in March 2020 to 1.2 per cent in February this year, according to SQM research.

But this hides tighter regional markets. In inner-city Melbourne, the vacancy rate fell from 3 per cent in March 2020 to 2.4 per cent in February 2022. In Gippsland in south-east Victoria, vacancy rates have halved over the same period to 0.8 per cent.

Vacancies fell from 3 per cent at the beginning of the pandemic to 2.4 per cent in February 2022 in Sydney’s inner west, and from 3.2 per cent to 2.5 per cent on the lower north shore. In regional NSW, the fall was much sharper: vacancies fell from 1.9 per cent to 0.6 per cent in Wollongong, and from 2 per cent to 0.7 per cent on the state’s north coast.

Dr Goldie said soaring rents, particularly in the regions, would hit those on lower incomes or income support the hardest. She said the federal government must take more action to help house people, including those left homeless by the floods.

“After a decade of Commonwealth neglect on social housing, we badly need a major national building program that starts to remedy this, with a sizeable part of the investment going to the regional centres facing the greatest stress,” she said.

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