Regional markets overburdened as 40% of city dwellers plan sea change

The study incorporated results from a nationwide survey that showed 40 per cent of capital city respondents were considering moving to regional Australia, an increase from the 20 per cent recorded in May 2023.

Speaking on these responses, RAI’s CEO, Liz Ritchie, stressed the research should “ring alarm bells for policymakers, industry and regional leaders”.

“Demand for regional living has never been higher, but as a nation, we are not keeping pace with delivering the fundamental building blocks that are needed as we rebalance the nation,” Ritchie said.

Overlooked regional markets under immense strain

These findings also coincide with the release of the RAI’s annual progress report for year two of its 10-year Regionalisation Ambition framework, which was launched in 2022 and aims to help direct the actions of government and industry towards achieving a “greater proportion of Australians living prosperously in the regions by 2032 and beyond”.

Across key housing metrics, the report observed a drop in the regional rental vacancy rate from 1.5 per cent in 2023 to 1.3 per cent in 2024 and a 9.4 per cent decline in regional building approvals from May 2023 to May 2024.

Ritchie said regional Australia is undergoing two “unprecedented transformations” and emphasised that the “once-in-a-lifetime population shift and the net zero transition” are increasing demand and highlighting the need for improved services and infrastructure in regional communities.

“Falling behind on critical targets is not in the nation’s best interests, and we can’t afford to squander this opportunity to better our country,” she said.

“Many regions are already struggling with housing, particularly rental markets, and until region-specific policy measures are put in place, this will only be further magnified.”

Ritchie also noted that regional employers are urgently seeking skilled workers who can deliver the necessary housing and infrastructure, stating that “nearly 76,000 jobs are currently available across regional Australia”.

While the CEO acknowledged that migrants could “help fill these roles”, she pointed to the decline in the percentage of migrants settling in regional areas – from 18.6 per cent in 2021–22 to 16.5 per cent in 2022–23 – and stated that this trend of fewer overseas arrivals “needs to change”.

Further illustrating the need for reform, Jacinta Reddan, the CEO of advocacy body Advance Cairns and RAI member, said the population of Far North Queensland had grown by 5.2 per cent over five years, placing strain on local housing supply.

“In the past year alone, growth in the Cairns region accelerated to 1.8 per cent. If this trend continues, we could see the region grow to more than 280,000 residents by 2026 – far surpassing current government predictions,” Reddan said.

She further highlighted that the rental market has remained particularly tight in Cairns, with the area reporting a vacancy rate of no more than 1 per cent in 40 of the past 50 months since July 2020.

“The housing demand from new residents, coupled with ongoing regional development needs, requires swift action from policymakers to ensure that Far North Queensland has the resources and infrastructure to accommodate this population shift,” Reddan said.

Long-term planning needed for regional Australia’s future

Even though Ritchie recognised that the “foundations for implementing change are being laid” through initiatives such as the federal government’s Regional Investment Framework, she emphasised that the government must now “build the structures” that will actually deliver support to Australia’s regional communities.

“The RAI is calling for a long-term plan for regional Australia’s future that considers population movement, the skilled workforce requirement, service provision and infrastructure needs. Given Australia’s changing population pattern, this is vitally important,” she said.

To deliver this framework, Ritchie advocated for the establishment of a “place-based decision-making model that would enable regions to have a greater say on how federal, state and territory government funding is spent”, emphasising that “there are responses to issues around housing and the attraction of overseas arrivals already underway in regional Australia and they deserve to be heard”.

“Likewise, regional communities need further support to play a bigger role in the net zero transition – through improving communication and having a seat at the table to ensure longstanding benefits are delivered to the regions alongside solar panels, wind turbines and transmission lines,” Ritchie said.

Commenting on the RAI’s Year 2 Progress Report, the president of the Real Estate Institute of Australia (REIA), Leanne Pilkington, echoed the “critical need for immediate and targeted measures to tackle escalating housing pressures in regional Australia”.

“The persistently low regional rental vacancy rates, which remain well below the 3 per cent threshold for balanced rental markets, highlight the ongoing housing supply challenges in these areas,” Pilkington said.

While Pilkington described the federal government’s recent housing programs, such as the recently greenlit Housing Australia Future Fund, as “positive steps”, she said that these policies “currently lack a specific allocation for regional areas”.

The president stressed that this was “concerning given that rental and acute housing crises are most pronounced in regional Australia” and added that regional areas have also undergone a sharper increase in house prices compared to capital cities, with prices rising by 54.2 per cent from March 2020 to December 2023, as opposed to 29.3 per cent in urban areas.

“A thriving regional Australia is vital to the nation’s overall success, so addressing these challenges requires a unified and immediate response from all stakeholders,” Pilkington said.