The Impact of the Great Covid Migration of 2020/2021
26 May 2021
Regional property markets have been heavily influenced by the Covid migration out of the major capital cities as people have gone looking for isolated comfort in Covid free safe havens.
There is no doubt that there was initial fear in the market as Covid descended upon us in early 2020, with most people pulling back, as they assessed their future security of not only their lives, but also their livelihoods and their ability to survive financially through what continues to be an unprecedented situation in living memory for most Australians.
With the clarity of 20/20 hindsight there have been some great opportunities come out of the Covid situation. The economic recovery in Australia has been incredible, helped in a big part by huge amounts of government stimulus.
The capital gain in some regional property markets has been very strong and fast paced, off the back of that has also been the rental pressure, with limited supply coupled with increased demand putting huge pressure on already buoyant PreCovid markets.
Examples of increases in median house prices from January 2020 to May 2021 are as follows:
Orange
– 26.6%
Bathurst
– 27.9%
Dubbo
– 11.3%
Albury
– 18.5%
Tweed Heads
– 22.5%
Nowra
– 23.4%
Source: PriceFinder
The yields have slightly softened on residential investment property as the capital values have increased, however overtime the yields will start to improve as rents continue to rise. The pressure of the Covid migration will continue to influence regional markets until the supply funnels can be filled with the required housing options to meet the growing demand.
The downside of these increases in rent and capital values is the affordability issue. Regional property has long been seen as the affordable alternative; however the major regional cities could start to price themselves out of this perception.
The opportunity’s that will come from this will be increased demand for cheaper and smaller housing, where the private sector can supply housing to the well-funded and government backed affordable housing sector.
Councils will need to be more open minded around density and affordability particularly in walking distance to the CBD’s of regional city’s as regular public transports options are generally fairly limited.
If you feel you have missed the boat to invest in regional property there are still plenty of markets that are yet to reach their full Covid potential, and looking at how far they have moved in comparison to how much growth other centres have experienced is a good starting point for further investigation into any new market.
If you have any further queries about how and where to invest feel free to get in touch to discuss your options further.
