In the third instalment of our consequences of COVID series, we look at recent changes to metro-regional migration patterns. Nothing has been immune from the effect of COVID-19 during the last year. Unsurprisingly, it has also affected metro-regional migration patterns.
There are always stories in the media, extolling the virtues of moving from the city to the country. Since the pandemic began, the media has moved up a gear suggesting that the cities, especially Sydney and Melbourne were depopulating to the regions. Why? It is to escape the dreaded COVID-19 scourge, driving increased demand for housing in regional areas, especially peri-urban areas on the fringe of the larger cities.
The COVID-19 effect
It is true that Sydney and Melbourne typically lose people in net terms to regional areas. The data published by the ABS also suggests that the net loss from metropolitan areas to regional areas has increased since the pandemic began. As the table below shows, the numbers in the year to December 2019 equated to a total of almost 15,000 or 3,740 persons per quarter. In the three quarters which the ABS has published in 2020, the numbers have increased substantially, with an average of almost 7,900 per quarter, with Melbourne and Brisbane showing the biggest differences. While these data are preliminary, it indicates an alignment between anecdotal evidence and data collected by the ABS. However, it is noteworthy to point out that 2019 net outflows from Metropolitan areas had fallen from 2017 and 2018 levels.
Average quarterly net intrastate migration (within State), Australian Metropolitan Areas, 2018 onwards
* Year to September
Source: ABS, Regional internal migration estimates, provisional, Sep 2020
The table also highlights the fact that Melbourne and Sydney are driving the overall net outflow when compared to the other capitals. Indeed, Brisbane and Perth are estimated to be gaining markedly from the rest of their respective States, which is an indication of two factors:
- Employment growth in regional areas has lagged behind metropolitan areas, resulting in more departures from the country and less incentive to move from Brisbane and Perth to regional areas.
- Overseas migration to these cities has fallen since the end of the mining investment boom, creating less pressure on house prices and therefore out-migration.
What drives people to move to and from large cities?
People go to and leave Australian cities at all ages and in all walks of life. However, there are distinct patterns for certain age groups to leave the metropolitan areas and similar patterns for those attracted to the ‘big smoke’. The main age groups migrating from regional to metropolitan areas tend to be young adults. Most of these young adults have just completed their schooling and have moved to the big city for university, TAFE and / or the ‘bright lights’. Many regional centres act as a stepping-stone or launching pad for these young adults, with some people moving firstly to the nearby regional centre and then into the big city.
In terms of migration from metropolitan to regional areas, the patterns of attraction are well established. People leaving metropolitan areas tend to be couples and family aged (0-9 and 30-49), as well as ‘empty-nesters’ and retirees (50 to 74 year olds). The reasons for leaving the big cities are varied and include a more relaxed lifestyle, reduced commute times, housing affordability and the financial benefit from the selling of city property for capital gains. See Chart below.
Intrastate Migration by age, Combined Australian Metropolitan Areas to Regional Areas, 2015-2016
Migration from metropolitan areas to regional areas is one of the most important ‘release valves’ for population within Australia and helps to prevent the big cities from getting even bigger. The metropolitan areas, in particular Sydney and Melbourne, attract the bulk of overseas migration, much of which is tertiary students and young adults. Unsurprisingly, the big cities are similarly attractive to young adult migrants within Australia (interstate and intrastate migration).
Flexibility in the workplace
As life seemingly returns to a greater level of normality in 2021, with more people working from the office, will these patterns of migration loss from the large cities continue? The idea that large numbers of employees / activities can be moved to less centralised locations has been a theme since I was in university. It was this idea that promoted the suburban office park, where ‘back-office’ functions could take place. The extension of this idea is moving jobs into the workers’ homes, wherever they may be. It is cost saving for the business and provides great flexibility for employees, although the greater intrusion of work into homes may not be appreciated by some.
By contrast, experts have talked about the importance of face-to-face meetings and direct human contact in advancing business interests and in decision-making. In particular, there has been an assertion that decision makers in business and government need to gravitate in areas that facilitate communication with other powerful and influential people. That has had to change in the last year, but old habits die hard.
In many respects, the current tensions are hinting at so much around workplaces and future work culture:
- Do we want to work from home and if so, every day?
- Will business and government support that aspiration?
- What about team building, socialising and group creativity?
- Do we need or want the same office space?
The future
What is unclear is whether the pattern of gain will continue. Historically, the metropolitan areas lose population in net terms to the regional areas. This migration loss to regional areas is like a release valve for the big cities which grow due to increases from overseas migration and natural increase, and in some cases, interstate migration.
One of the historical patterns of migration within Australia is the outward sectoral movement of people away from the central city. This has been driven by three notable factors:
- the bulk of new development has occurred on the edge or fringe of big cities.
- people have traded off accessibility to employment and services to afford larger and more spacious properties.
- people, most notably retirees, have traded in their equity in the big cities and built an enormous capital gain by moving to cheaper, regional areas.
It is hard to think that there will not be a slow-down in regional gain from metropolitan areas in the coming year, as the expectation of more employers to increase contact time in the office is realised. The drudgery of long commutes, even if it is only for one or two days a week, will likely drive this correction. However, this must be contrasted against the maintenance of high house prices in the big cities and the experience of working from home during COVID-19, which will promote more out-migration and therefore population growth in the regions.
The oddity of high house prices in a period of almost no overseas migration will be explored in our next blog article when we will look at the impact of COVID-19 on the housing market.