House prices for Australian regional residents are becoming too high

Phil Taylor was backpacking around the world when he accidentally came across the coastal paradise of Byron Bay.

“For a boy from rural New Zealand, this place was a dream come true.”

He eventually settled in the surf town and took over a local institution: the Byron Bay General Store.

For years, Mr. Taylor enjoyed the surf spots that the locals kept secret. It wasn’t until 20 years later that he began to notice a change.

The 1970s vibe that had attracted him slowly faded, while the characters – the ones who, according to Mr. Taylor, brought color and life to the city – slowly left town.

In their place, Hollywood high rollers, including Zac Efron, who briefly dated a waitress at his store, began frequenting his business.

Experts warned about the impact of gentrification on small regional towns before the pandemic, but the global crisis has seen internal migration rates rise.

Many Australians sold their homes in capital cities and moved to rural areas to curb their spending. The Australian Bureau of Statistics found that the regional trend in Australia has continued since the height of the pandemic.

In the last budget year alone, the population of regional Australia grew by 117,300 people, or 1.4 per cent.

Although many councils welcomed the population growth, local residents like Mr Taylor paid a price.

Mr Taylor said he had watched house prices rise, the cost of doing business increase and the vibrant city he knew change irreparably.

“It was a slow, gradual process, but the COVID pandemic has definitely accelerated it,” Taylor said.

“These people came to live here, and the hardest part was you couldn’t blame them,” he said.

“The problem was that they had such enormous financial clout that they simply overwhelmed the local population, all the working class people.

“They were the people who really brought the energy and the atmosphere.”

Mr Taylor said when he realised Byron Bay had become a shadow of the community he once loved, he decided it was time to leave.

“I sold the business and moved away from it altogether. I lived in that city and loved it so much. It was an oasis where I thought the sense of community and the beach would always be there.

“Change is an unfortunate constant, and I didn’t want to be that guy who whined about how good it used to be, so I left.”

In the following years he moved back to the coast, to the country’s most expensive capital.

Rather than being forced to pay more to move closer to Sydney, Mr Taylor’s living costs – including moving into rental accommodation – were significantly reduced.

The illusion of affordability

According to Dr Tony Matthews of Griffith University, it is no longer accurate to say that living regionally is the economic choice it once was.

“There may be a relatively affordable housing market in a remote location in the region, and then for some reason that location becomes popular,” he said.

“That causes house prices to rise and with that rents to rise. And then suddenly the people who could afford to live there before, can no longer do so.”

Research from the Regional Australia Institute (RAI) has found that the number of people moving from cities to Australia’s regions has reached a 12-month high, driving up house prices across the country.

“Regional living continues to dominate, with around 24.2 per cent more people moving from cities to regions in the March quarter 2024 than vice versa,” the report said.

“This compares to an average spread of 21.9 percent in the two years before COVID.”

In addition to housing, the cost of living in regional Australia is also high. An increase in natural disasters is driving up insurance and freight costs. This in turn has pushed up food prices in parts of the country.

While figures continue to show significant migration to the regions, it is still unknown how many regional Australians have been displaced in recent years as a result of the steady stream of internal migration.

According to CoreLogic, the average rental price in regional Australia is $544 per week.

In the north of Western Australia, where both tourist resorts and mining areas are located, the average rent in the town of Broome is $881 per week.

On the East Coast, rent on the Mornington Peninsula is around $675, and on the Sunshine Coast $770.

In Australia’s top wine region, Margaret River, the price is around $634.

In Byron Bay, Mr Taylor’s old town, rent can cost up to $1,200 a week.

The average house price is highest on the Sunshine Coast, at $1,044,279, followed by Illawarra, Richmond and Tweed, and Southern Highlands and Shoalhaven.

The average regional house value in Australia is $627,872.

Dr Matthews is an urban planner who predicted gentrification in parts of the Sunshine Coast during the height of the pandemic. He said it was clear that parts of the Sunshine Coast, regional Western Australia and the northern New South Wales coast had changed in recent years.

He said increasing workforce mobility was causing income to flow from capital cities to regional city centres, reducing the price for long-term residents.

According to Dr Matthews, this has highlighted the failure of some councils to adapt to the increasing trend of internal migration.

“That also gives people reason to reconsider life in the region,” he said.

Dr Matthews said proactive planning for gentrification – filling gaps in health and education services for a wider population – would be critical to protecting the fabric of communities into the future.