Could coronavirus have a silver lining for regional housing markets as people flee to the country?
Urban dwellers who are fed up with working from home in expensive city homes during COVID-19 are fleeing to country lifestyles.
And analysts say that may just have a silver lining for regional housing markets across Australia.
Before the pandemic, Melbourne resident Ellie Bonnett had spent two years unsuccessfully trying to buy her first home in the capital city market.
“I’d been going from viewing to viewing, and looking at these one-bedroom apartments with body corporate fees over $5,000,” she said.
Then the pandemic hit.
After years working in a CBD office, the human resources director found herself working from her rented apartment in Melbourne’s south-east. Cooped up in her living room, she dreamed of a country lifestyle.
The urban claustrophobia intensified when the tech company Ms Bonnett works for announced it is closing all of its offices globally and will go entirely remote.
“I want to embrace the situation we’re in with COVID-19 and move to Daylesford, which is the most special place in the world,” Ms Bonnett said.
The millennial bought her first home in the country town, two hours north of Melbourne, in May. It cost just under $600,000 and has several bedrooms, a backyard, and a balcony with views over rolling country hills.
“COVID-19 is definitely the catalyst. I wouldn’t have had the confidence to do this before COVID-19 or the burning desire to get out.”
How many people are leaving big cities during COVID-19?
National population data is not available yet for the pandemic period.
But several real estate agents across regional Victoria have told The Business there has been growing interest from Melburnians during COVID-19.
The Daylesford real estate agent who sold Ms Bonnett her first house has been fielding more enquiries than ever.
For March to July 2019, Michael DeVincentis’s agency sold 32 homes in the Daylesford region to an even mix of local buyers and out of towners.
For the same period this year — the pandemic months — sales are up to 37, and 85 per cent of the buyers are out of towners.
“In the last 12 months, we’ve had about an 8 per cent rise in capital value,” Mr DeVincentis said.
It has been the same trend with the agency’s rentals.
“When COVID-19 first hit, I thought we were going to shut up shop. It’s been absolutely counterintuitive.”
There is a chance that long-term data will never pick up all of the regional relocations during the pandemic. Some people who are leaving Melbourne during COVID-19 are not going through traditional sales routes.
Harley Breen also left Melbourne with his family during the pandemic, after all of his work as a live entertainer dried up. They left a rental in Melbourne’s south-west in March but their new home in the countryside around Daylesford is through a private arrangement.
“We were paying $3,500 a month for a Melbourne rental and it’s much less here,” Mr Breen said.
“The decision-making was all finance. Now we’re looking at long-term places in the area. And exploring other parts of regional Victoria too.”
Other people The Business has spoken to have left the big smoke to move back in with their parents in regional towns in Victoria and NSW, which also may not initially get picked up by official data.
Could regional housing markets benefit?
Property analysis firm CoreLogic recently commissioned a report into regional migration during COVID-19.
It found house prices in regional centres right across Australia have been more stable during the pandemic than capital city markets.
Its data compared the rolling quarterly change in dwelling values for Queensland’s Gold Coast and Sunshine Coast; New South Wales’ Illawarra and Newcastle; and Victoria’s Geelong and Ballarat with the capital cities in those respective states.
All regional markets initially suffered downturns during COVID-19, however, they have rebounded more quickly than their capital city equivalents, and Illawarra and Ballarat are even up year-on-year by almost 2 per cent.
Eliza Owen, CoreLogic’s head of research for Australia, said it is too early to tell if the relative stability of regional Australia property markets during COVID-19 is part of a bigger trend.
That is because housing sales have been low due to COVID-19 restrictions and extreme economic volatility. Capital city markets have also been more affected by the loss of international migrants, Ms Owen said.
“Once we start to see improvements in labour market conditions and more people participating in the dwelling market, and buying and selling property, that is when we will get a better reading of whether this is just a coincidence or if it’s actually a long term trend,” Ms Owen said.
Ms Owen said there were many factors at play.
If property prices in capital city markets fall significantly in the coming months, it may keep some potential tree changers in urban markets. And while some may be fleeing cities now, they may return if working-from-home arrangements cease or metro job prospects pick up.
Ms Owen said an overall recession will also inevitably affect regional property markets too.
“There’s a lot that we’re taking into account when trying to understand where the housing market could go,” Ms Owen said.
“Long term, the strange upside of COVID-19 is that it’s normalised remote work. People are potentially more wary of high-density city areas and that means, in the long-term, I think regional markets will see a benefit from that.”
Ms Bonnett hopes her looming relocation to Daylesford this August is just the start of a new trend.
As well as working her tech job from home in Daylesford, she plans to open a community hub in the country town to encourage others into making the lifestyle change.
“COVID-19 has really given us the chance to ask ourselves what’s important,” she said.
“I definitely can’t wait to get the hell out of Melbourne. I do feel like I’m escaping. Thank God and sorry, but I’m out of here.”