New Frontiers: Key Regional Growth Hotspots Revealed

Sea change, tree change or change for change’s sake. Whatever the reason, the number of Australians seeking lifestyle changes and affordable housing outside major cities has stayed strong post-pandemic—and developers are capitalising on the growth as new markets emerge. Pre-pandemic, regional areas had been experiencing steady but slower population growth compared to capital cities. The onset of the pandemic triggered a surge in people leaving the capitals motivated by lockdowns and the rise of remote work opportunities. Today, regional areas continue to experience significant growth compared with pre-pandemic levels. A report by the University of Melbourne’s The Future of Work Lab, ‘Regional Migration Survey ’ , reveals that better lifestyle and amenity, proximity to natural environments and housing affordability are the primary drivers of this shift. The Federal Government’s Centre for Population, meanwhile, also credits work flexibility, economic uncertainty and market conditions as motivations for the shift. Regional Australia Institute chief Liz Ritchie says regional Australia has become the nation’s new frontier. “The population movement we’re seeing is a sustained new trend that is higher than pre-Covid migration patterns,” Ritchie says. “The regional Australia we have now is quite different to the regional Australia of five years ago. “The emergence of this new era signifies how important the regions are to the future of our nation. The regions will be at the heart of Australia’s net-zero transition, and it is vital the infrastructure and services our growing regions require are met to ensure long-term prosperity and sustainability of our country.” So where on the map should developers be putting pins? The Regional Movers Index June 2024 Quarter Report identifies the top-five regional growth areas by share of net-capital regional migration as the Sunshine Coast, Townsville and the Fraser Coast in Queensland, Greater Geelong in Victoria and Maitland in NSW. Top five regions for total population inflows ▲ Top five destination for regional migration for each state. Source: Regional Australia Institute The June 2024 quarter report highlights Lake Macquarie and the NSW South Coast as regional hotspots to watch. Lake Macquarie attracted almost 5 per cent of net internal migration in the past year. The fastest-growing regions for net internal migration include the Bega Valley and Eurobodalla in NSW, Victoria’s Strathbogie and the Surf Coast, and Northam in WA. Bega Valley had a four-fold increase in the past year, while the Surf Coast experienced a three-fold increase. Top-five fastest-growing regions by state ▲ Top five LGAs: greatest growth in net internal migration inflows. Source: Regional Australia Institute Commonwealth Bank of Australia executive general manager Regional and Agribusiness Paul Fowler says the coastal appeal of regional hubs such as Lake Macquarie, Bega Valley and Eurobodalla offer an attractive lifestyle with the benefits of quality healthcare and education services, and employment opportunities that are being further bolstered by major industry investments such as the Snowy Hydro 2.0 project in Southern NSW. While some areas are experiencing significant inflows, others are experiencing population decline, such as SA’s Alexandrina, Augusta-Margaret River in WA, East Gippsland and Golden Plains in Victoria, and the Snowy Valleys of NSW. Ethos Urban Melbourne director of economics Chris McNeill identifies several regions with strong development potential. ▲ Ethos Urban Melbourne director of economics Chris McNeill. “Queensland is seeing strong growth in coastal regional cities and towns,” McNeill told The Urban Developer . “In NSW, we’re noticing growth in the Hunter Valley hinterland, Illawarra hinterland, and rural areas east of Canberra. “Victoria is experiencing growth in peri-urban areas around Melbourne, the Bellarine Peninsula, and growth areas of Ballarat, Bendigo, and Wodonga. Western Australia’s Margaret River, Dunsborough, the broader south-west, and the Pilbara region are also showing promise. In South Australia, Mount Barker stands out.” McNeill says the regions winning new residents are lifestyle locations with good access and connectivity to capital cities by freeway and/or rail, or to other major regional cities. ▲ The Bega Valley is one of the fastest-growing LGAs in the nation. For property developers, these shifts present opportunities and challenges. Opportunities lie in greenfield markets and locations suitable for medium or higher-density development, McNeill says. Coastal locations with views offer viability for higher-density projects, subject to planning controls. However, developers must navigate increased costs associated with construction, transport, and development. “All development costs have increased over the past four to five years and, in many cases, the market is not yet ready, or is unable, to accept the new selling price required to ensure the viability of new projects.” Sentinel Property Group chief Warren Ebert identified several regional hotspots he says are ripe for investment and development: Mackay, Townsville, Darwin, and Cairns. Each area presents its own set of opportunities and challenges. ▲ Sentinel Property Group chief executive Warren Ebert. “Mackay is just such a solid economy ... [the] average income is not dissimilar to Sydney,” Ebert says. “Your housing prices are probably a third [of capital cities’]. Your private schools are half the price, so disposable income is much higher in those areas. When you hit difficult times, they just don’t feel it as bad.” Mackay, 970km north of Brisbane, while traditionally associated primarily with sugar, beef and coal mining, aims to address challenges, attract investment, and support workforce development by diversifying its economy with biofuels, tourism, healthcare, sport, aviation, education, innovation and business assistance among growing sectors. Meanwhile, Townsville is experiencing growth driven by defence and infrastructure projects. Ebert says that the region’s burgeoning economic potential means investment in retail could be the way to go. “It [Townsville] is the largest defence base in Australia, and it keeps growing,” Ebert says. “There’s also the $5.2-billion copper string project going out to Mount Isa.” ▲ Mackay’s economic outlook makes it an appealing region for investors and developers. Darwin’s strategic location also presents unique opportunities, according to Ebert. “Darwin has got everything you want. It’s basically in Asia. The opportunities up there in the Northern Territory, not only mining, but the defence situation up there—the amount that the Americans are putting into it. The Japanese may be looking to invest major defence projects in the region.” The resulting population migration to Northern Australia presents opportunities that are not without significant challenges, says Ebert. “You cannot get builders up there. The cost of construction is high. The cost to attract labour is outrageous. The prices are completely out of control.” For Queensland, the housing crisis is a major impediment to regional growth, Ebert says. “You’ve got nowhere for people to live. This affects the locals, and the workforce needed for development projects. “We need houses for the labour force but we can’t get anything built. “The State Government is building nine new hospitals but there aren’t enough people to staff them. You’ve got Multiplex and John Holland and big companies doing all the infrastructure projects. Who’s there to build the high-rise accommodation and the homes in these areas? “And we’re about to start working on the infrastructure projects for the Olympics, which is going to make it even worse. “We need another 5000 to 6000 subcontractors to do that, but where are they going to live? This is a major challenge for the region.” But despite these challenges, the underlying demand for development generated by regional migration and population growth remains strong. McNeill says developers should prepare for when market conditions improve. Those who are attuned to these regional trends will be best placed to capitalise on the opportunities that lie ahead. “The best thing developers can probably do is to be prepared for lift off; when it comes.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

New Frontiers: Key Regional Growth Hotspots Revealed

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