The Great Migration: How Post-Pandemic Relocation Trends Are Reshaping Australian Property Values in 2026

1. Executive Summary

The Australian property market in 2026 stands as a testament to the profound and multifaceted impact of post-pandemic relocation trends. What began as an unprecedented internal migration crisis during the height of COVID-19 lockdowns, characterized by a significant exodus from major capital cities to regional and coastal areas, has evolved into a complex rebalancing act. This rebalancing, driven initially by lifestyle changes and remote work capabilities, and subsequently by the powerful currents of returning international migration and shifts in economic conditions, has fundamentally reshaped Australia’s urban and regional landscapes. As of 2026, the nation’s property values reflect these dynamic forces, with regional markets establishing a new, elevated baseline and capital cities demonstrating remarkable resilience and renewed growth, albeit with ongoing challenges in housing supply and affordability.

The initial phase of this “Great Migration” saw a distinct gravitation away from the dense urban centers. During the 2020–21 financial year, Australian combined capital cities experienced a net loss of over 25,000 residents, a statistical anomaly largely driven by significant outflows from Melbourne (-60,500 people, a 1.2% drop) and Sydney (-5,150 people)^[1],^[2]. Conversely, regional areas collectively gained approximately 70,900 inhabitants during the same period^[3]. This immediate and substantial demographic shift catalyzed an extraordinary boom in regional property markets. Overheating in these areas was evident with regional housing values surging by approximately 56% since March 2020, dramatically outpacing the 34% rise observed in capital city values over the same timeframe^[4]. Certain sought-after regional enclaves, such as Byron Bay, even witnessed house prices double within a single year, reaching unprecedented highs^[5]. This surge was not merely a temporary blip but laid the groundwork for permanent shifts, with popular regional locations remaining 30-50% pricier than their pre-COVID levels even after some subsequent cooling^[6],^[7].

The internal migration patterns also induced a significant reshuffling of populations between states. Queensland emerged as the unequivocal winner, attracting an astonishing net interstate migration of around 32,600 people in the year leading up to September 2023^[8]. This influx contributed significantly to Queensland’s fastest population growth in over 15 years, registering an impressive 2.7% increase^[9],^[10]. In stark contrast, New South Wales and Victoria experienced net outflows during the peak lockdown periods, reshaping the demand landscape across their metropolitan and regional markets.

However, the momentum of this regional shift began to moderate by 2022–23 with the reopening of Australia’s international borders. The return of overseas migration, including international students and skilled workers, spurred a spectacular urban resurgence. Australia’s capital cities recorded a record increase of 517,000 people in FY 2022–23, predominantly driven by net overseas migration^[11],^[12]. Major metropolises like Melbourne (+167,500 people) and Sydney (+146,700 people) registered their largest annual population gains on record^[13],^[14]. This urban rebound, coupled with a gradual return-to-office trend, breathed new life into demand for metropolitan property and rental markets, instigating a nationwide rental crisis.

The rental market, in particular, experienced extreme volatility. Inner-city rental vacancies, which had spiked above 10% in some areas like Melbourne’s CBD during 2020^[15], plummeted to all-time lows. By late 2023, Sydney’s rental vacancy rate hit a mere 1.2%, representing a two-thirds reduction in available listings compared to the pandemic’s onset^[16]. Nationally, rents have surged by 37.6% since March 2020, with regional rents experiencing an even faster rise of over 40% compared to capital cities (+36%)^[17],^[18],^[19], creating significant affordability pressures for tenants across the country.

By 2026, the Australian property landscape is characterized by a new equilibrium. While overheated regional markets experienced a modest correction of around 6-7% from their peaks in coastal hotspots of NSW and QLD, and a “reverse sea change” saw some individuals return to cities, the overall structural shift persists. Net regional inflows remain 51% above pre-COVID averages in late 2024^[20]. Brisbane’s median house price crossing $1 million for the first time^[21] exemplifies the upward re-tiering of many mid-sized cities and outer suburban areas. This dynamic environment necessitates ongoing critical scrutiny from businesses and policymakers to address perennial challenges of housing supply, infrastructure development, and affordability, ensuring sustainable growth in this permanently altered and more distributed population landscape.

1.1. Unprecedented Internal Migration and the Regional Property Boom

The initial phase of the COVID-19 pandemic triggered an extraordinary shift in Australia’s demographic landscape, leading to what has been widely termed the “Great Migration.” Driven by health concerns, the advent of remote work, and the search for greater affordability and lifestyle amenities, thousands of residents departed Australia’s largest capital cities, instigating an unparalleled boom in regional property markets. This urban exodus represented a stark reversal of long-standing population trends.

Demographic Reversal: City Outflows and Regional Inflows

During the financial year 2020–21, Australia’s combined capital cities recorded a net population loss of 25,985 residents^[23]. This was a historically significant event, with Melbourne experiencing the most dramatic impact, losing an unprecedented 60,500 people, translating to a 1.2% population decline^[24]. Sydney also registered an outflow of 5,150 residents during the same period^[25]. These figures contrast sharply with historical patterns, where capital cities were traditionally the primary destinations for population growth. Concurrently, regional areas across Australia absorbed this outflow, gaining approximately 70,900 residents in 2020–21^[26]. This shift underscored a fundamental repricing of lifestyle and locational preferences, enabled by the widespread adoption of flexible working arrangements.

Explosive Growth in Regional Property Values

The sudden surge in demand for regional housing had an immediate and profound effect on property values. From March 2020 to early 2025, combined regional Australian dwelling values soared by an impressive 56.3%^[27]. This growth significantly outstripped the 33.6% increase observed in capital city values over the identical period, highlighting the disproportionate impact of the regional shift^[28]. The national average home price rise of around 38% since the pandemic’s onset far exceeded wage growth, signaling a substantial increase in housing wealth but also an erosion of affordability^[29].

Specific regional markets experienced truly astonishing price appreciations. For instance, Byron Bay, in New South Wales’ Richmond-Tweed region, became an emblematic case. In the 12 months leading up to mid-2021, its median house price surged by an astounding 90.9% year-on-year, briefly surpassing Sydney as the nation’s most expensive market^[30]. While this was an extreme example,
dozens of smaller towns reported 40-50% annual growth, including Finley (+49%) and Murrurundi (+46%)^[31]. These spikes were directly attributable to an influx of affluent remote workers and urban evacuees seeking a change of pace and often commanding higher budgets freed from capital city property sales.

Table 1.1 illustrates the divergent property value growth rates:

Interstate Migration and State-Specific Impacts

The pandemic also catalyzed significant interstate migration, reshaping demand across state borders. Queensland emerged as the dominant beneficiary, attracting 120,579 new residents in the year to September 2023, with 32,625 of these being net interstate arrivals^[35]. This figure represents an increase of 170% over pre-COVID (2019) levels and propelled Queensland’s annual population growth to 2.7%, its fastest in over 15 years^[36],^[37]. This strong northward “lifestyle drift” was particularly evident in magnet areas within Queensland, such as the Gold Coast, which attracted 11% of all metro-to-regional movers in 2021–22, and the Sunshine Coast, which drew 6%^[38]. Overall, Queensland regions captured 37% of net capital-city outflows^[39].

Conversely, New South Wales and Victoria experienced significant net outflows of residents to other states during the lockdown periods. Victoria, in particular, registered negative interstate migration each year from 2020 to 2022, including a loss of 18,300 residents in 2020–21 alone, before returning to a small net gain by late 2023. Similarly, NSW saw net interstate losses of around 16,000 people in 2020–21. This exodus contributed to a cooling of property demand in Sydney and Melbourne relative to Brisbane and Adelaide, for example, with Sydney experiencing slower growth of approximately 28% over 2020–22, compared to Brisbane’s 47% surge in the same period^[41],^[42].

The primary drivers behind this interstate reshuffling were a combination of lifestyle considerations and economic factors. The appeal of larger homes, lower population density, and perceived better quality of life in regional areas, coupled with the ability to work remotely, encouraged many to relocate. The relative affordability of property in states like Queensland compared to Sydney and Melbourne also played a crucial role, allowing migrants to achieve greater equity gains.

1.2. The Return of Overseas Migration and Urban Rebound

As Australia transitioned out of its most stringent pandemic restrictions and its international borders reopened, a new and powerful demographic force began to reshape the property market once again: the rapid return of overseas migration. This influx marked a significant turning point, revitalizing major capital cities and setting the stage for a rebalancing of demand.

Unprecedented Overseas Migration Post-Borders Reopening

After nearly two years of minimal international movement, Australia witnessed an unprecedented surge in overseas migration from mid-2022 onwards. The calendar year 2022 alone saw a record 387,000 net migrants arrive, making it the highest annual influx ever recorded^[44]. This massive return, comprising international students, skilled workers, and returning expatriates, constituted 78% of Australia’s total population growth in 2022^[45]. The nation’s total population increased by a record 496,800 people (1.9%) in 2022, with growth accelerating further into 2023^[47].

Capital City Population Roars Back

The vast majority of these new arrivals gravitated towards the major capital cities, leading to a remarkable population rebound. In the financial year 2022–23, capital cities recorded a collective increase of 517,200 people (a 3.0% growth rate), representing the largest annual growth on record^[49],^[51]. Melbourne, which had experienced the most significant outflow during the pandemic, saw its population increase by 167,500 people, marking its single largest annual gain ever^[53]. Sydney closely followed, adding 146,700 people in the same period, also its highest on record^[55]. Even Perth experienced robust growth, with its population increasing by 3.6% in 2022–23, the fastest among capital cities^[57]. These figures demonstrate a rapid reversal of the city exodus, driven by foundational demand for employment, education, and services typically concentrated in urban centers.

Urban Property and Rental Market Re-energized

The sudden influx of population into capital cities swiftly reignited demand in their respective property markets. Despite a challenging interest rate environment, capital city dwelling values started to regain momentum in 2023. Combined capital city home prices rose by 5.95% from their late-2022 low to November 2023, significantly outperforming the regions’ 2.43% growth over the same period^[59]. The return of migrants, coupled with ongoing tight supply, fueled property value increases, with some cities experiencing their largest quarterly rises in late 2023–early 2024 since the initial pandemic boom.

The impact on the rental market was even more pronounced, leading to what analysts have described as an acute rental crisis. Inner-city rental vacancies, which had soared to over 10% in Melbourne’s CBD in 2020, plummeted back to near 1% by 2023 as international students and returning workers absorbed available supply^[61],^[63]. Sydney’s vacancy rate hit an all-time low of 1.2% by late 2023, representing a two-thirds reduction in available rentals compared to the beginning of the pandemic^[65]. This severe supply-demand imbalance drove significant rental inflation. Nationally, rents jumped 37.6% from March 2020 to early 2025, with capital city rents rising approximately 36%^[67],^[69]. Perth, in particular, saw a staggering 63.9% rent surge, adding an average of $274 per week to median rents over the period^[71]. This rapid rent growth has exacerbated affordability challenges, particularly for younger demographics and low-income households.

1.3. New Equilibrium: Regional Resilience and Evolving Challenges

By 2026, the Australian property market has largely settled into a “new equilibrium,” reflecting the long-term impacts of the pandemic-induced migration shifts. While the initial frenzy of regional growth has cooled, and cities have reasserted their traditional role as population magnets, the landscape remains fundamentally altered. This equilibrium is characterized by continued regional resilience, a nuanced “reverse sea change” effect, and persistent, evolving challenges regarding housing supply and affordability nationwide.

Cooling in Overheated Regional Markets and the “Reverse Sea Change”

The explosive growth in regional areas began to moderate by late 2022 and throughout 2023, primarily due to rising interest rates that tightened borrowing capacity across the board. Regional home values, after peaking, experienced an overall modest correction of approximately 2.2% in 2022^[73]. Specific coastal hotspots that saw the most dramatic appreciation also saw the most significant, though still moderate, adjustments. For example, NSW’s Richmond-Tweed region (Byron Bay area) experienced a ~15% decline from its 2022 peak, while Queensland’s Sunshine Coast dipped by about 6.5%^[75]. Despite these corrections, property values in these areas remained substantially higher than their pre-pandemic levels, often by 30-50%^[77].

A minor but notable phenomenon during this period was the “reverse sea change,” where some individuals who had moved to regional areas during the pandemic opted to return to capital cities. This was partly influenced by employers increasingly mandating hybrid or in-person work arrangements, making long-distance commutes untenable. While this trend was not a mass exodus and was significantly outweighed by continued city-to-regional movements, it contributed to the modest softening of prices in some regional markets^[79].

Sustained Regional Appeal and Emerging Hotspots

Crucially, the enthusiasm for regional living has not dissipated entirely. Even in late 2024, net regional inflows were still 51% above pre-COVID averages, with 32% more people moving from big cities to regions than in the opposite direction^[81]. This indicates a sustained, albeit normalized, desire for regional lifestyles. Interestingly, the pattern of regional migration expanded beyond the immediately commutable coastal belts, giving rise to new hotspots. Areas like Gympie in Queensland and East Gippsland in Victoria emerged as popular new destinations, as movers sought affordability and lifestyle further afield^[83],^[85]. The NSW border city of Albury, for instance, witnessed a remarkable 16-fold increase in net capital-city migrants in the year to June 2025, showcasing the broader geographic reach of this enduring trend^[87].

Housing Supply, Affordability, and Future Implications

The dynamic interplay of capital city outflows, regional booms, massive overseas migration, and subsequent urban rebounds has laid bare critical housing supply and affordability challenges across Australia. The rapid population shifts consistently outpaced the ability of new housing construction to keep pace. During the peak regional boom, properties listed for sale in some regional areas plummeted to 40-50% below pre-pandemic norms^[89], creating fierce competition. Although capital cities also experienced supply constraints, the regional crunch was particularly severe, leading to significant price increases and a dramatic tightening of rental markets.

The nationwide rental crisis remains one of the most acute consequences of these demographic shifts. Australia’s rental vacancy rate fell to a mere 1.6% in 2023, significantly below its 10-year average^[91]. This tight market, combined with surging demand from returning migrants and limited new supply, drove the average national rent increase of 37.6% since March 2020^[93]. The rapid rent hikes have severely impacted housing affordability, pushing many low- and middle-income households into rental stress and often forcing them to seek housing further from employment centers. The shift of properties from long-term rentals to lucrative short-term holiday accommodation in popular regional destinations further exacerbated the supply crunch.

In response to these challenges, governments at federal, state, and local levels are grappling with policy solutions. Priorities include increasing housing supply through expedited planning approvals, incentivizing new construction, and exploring reforms to rental regulations. State initiatives, such as Queensland’s $32 billion transport plan to accommodate population growth^[95], and the Commonwealth’s ambitious target of 1.2 million new homes over five years, reflect the urgency of the situation. However, the lag time between policy implementation and tangible housing supply increases means that affordability will likely remain a significant concern for the foreseeable future.

In essence, the “Great Migration” has permanently reset the baseline for Australian property. While capital cities have reaffirmed their position as national economic engines, regional Australia has established an elevated and resilient market presence. Businesses and policymakers are navigating a new landscape of distributed population and demand, making strategic investments in infrastructure and housing critical for sustainable growth and equitable access to housing in the coming years.

2. The Great Migration: Pandemic-Driven Exodus from Capital Cities

The dawn of the COVID-19 pandemic in early 2020 ushered in an unprecedented era of internal migration within Australia, fundamentally reshaping the nation’s demographic landscape and property markets. Strict lockdowns, the rapid acceleration of remote work capabilities, and a re-evaluation of lifestyle priorities prompted a significant exodus from the bustling capital cities, particularly Melbourne and Sydney, towards regional and coastal havens. This “Great Migration” marked a historic reversal of long-standing urbanisation trends, driving acute population shifts with immediate and far-reaching effects on both urban centers and their newly popular regional counterparts. The period of 2020-2021 stands as a watershed moment, illustrating the profound impact of a global health crisis on residential patterns and property values across the continent.

Initial Exodus from Major Capital Cities and Corresponding Regional Growth

The early phase of the pandemic witnessed a dramatic population redistribution across Australia, challenging decades of concentrated growth in its largest metropolitan areas. For the first time in recent memory, Australia’s combined capital cities experienced a net population loss, shedding over 25,000 residents in the 2020–21 financial year alone^[1]. This was largely attributable to residents seeking refuge and lifestyle advantages in regional areas as lockdowns became a pervasive feature of urban life. The most affected cities were Melbourne and Sydney, which historically served as primary magnets for both internal and international migration.

Melbourne’s Unprecedented Decline

Melbourne, in particular, bore the brunt of this urban outflow. Subjected to some of the world’s longest and strictest lockdown measures, the city’s population contracted by an astonishing 60,500 people, representing a -1.2% drop in a single financial year (2020–21)^[1]. This decline was unprecedented in modern Australian history, marking a stark departure from its previous trajectory of robust population growth. The inner-city areas of Melbourne saw a dramatic increase in rental vacancies, with rates spiking above 10% – a stark contrast to pre-pandemic levels of around 2%^[10].

Sydney’s Outflow and the Lifestyle Shift

Sydney also experienced a net population outflow during this period, albeit to a lesser extent than Melbourne, losing approximately 5,150 residents in 2020–21^[1]. The drivers were similar: residents, empowered by remote work, sought more spacious living conditions, reduced population density, and access to natural amenities that many regional and coastal towns offered. The lifestyle appeal became a dominant factor, as the ability to work from anywhere untethered many individuals and families from their traditional urban workplaces.

Regional Australia Becomes a Magnet

In direct opposition to the urban decline, regional Australia flourished. During the same 2020–21 period that saw capitals lose residents, regional areas collectively gained approximately 70,900 people^[1]. This mass exodus from major cities to regional and coastal areas ignited an unprecedented housing boom and surging population growth in what were previously considered quieter, more affordable locales. The shift was not just about escaping lockdowns; it represented a fundamental re-evaluation of living preferences, spurred by the newfound flexibility of remote work and a desire for greater well-being.

Immediate Effects on Property Values and Rental Markets

The sudden and substantial shift in population dynamics had immediate, dramatic effects on property values and rental markets across both capital cities and regional areas. The influx of city-dwellers into regions, often with higher purchasing power and equity from prior capital city property ownership, created intense demand and drove prices skyward.

Explosion in Regional Property Values

Regional housing markets experienced an unparalleled surge in values since the pandemic’s onset. Combined regional areas in Australia saw housing values jump by approximately 56% since March 2020^[3]. This significantly outpaced the roughly 34% rise observed in capital city values over the same period^[3]. Dozens of regional markets recorded double-digit annual price growth, a phenomenon directly attributable to the influx of remote workers and city evacuees. Some niche, highly sought-after areas, such as Byron Bay, witnessed extraordinary price increases, with median house prices reportedly doubling in just a year and reaching record highs^[4]. Key markets illustrative of this boom include:

• Byron Bay (NSW): In mid-2021, Byron Bay’s median house price soared by 90.9% year-on-year, briefly surpassing Sydney as the nation’s most expensive market^[6].
• Sunshine Coast (QLD): Home values here surged by 37% above pre-pandemic levels (March 2020), even after a subsequent correction^[5].
• Gold Coast (QLD): Similarly, values remained 41.9% higher than March 2020 levels post-pandemic^[5].
• Richmond-Tweed (Byron Bay region, NSW): Values remained 24% above pre-COVID levels^[5].

Further illustrating the widespread nature of the regional boom, smaller towns like Finley (+49%) and Murrurundi (+46%) experienced 40–50% annual growth rates, largely due to an inflow of affluent remote workers and city residents seeking a change^[6].

Supply Crunch in Regional Housing

The regional property boom was exacerbated by a critical shortage of available housing. By late 2022, the number of properties listed for sale in regional Australia was a staggering 45% below pre-pandemic norms, in contrast to a 10% drop in capital city listings^[7]. In some high-demand country areas such as Barossa (SA) and Darling Downs (QLD), total listings plummeted by 60–70% compared to pre-2020 levels^[7]. This severe supply constraint, coupled with soaring demand, created an extremely competitive market environment that largely insulated regional prices even as interest rates began to rise later in the period.

Whipsawed Rental Markets

The rental market experienced unprecedented volatility during this period. In the initial phases of the exodus, inner-city rental vacancies in Sydney and Melbourne surged, peaking at over 10% in some areas as students and workers vacated^[10]. Landlords were forced to offer incentives to attract tenants. However, regions, once seen as havens of affordability, quickly became saturated. As demand spiked and listings dwindled, regional rents jumped by over 40% since March 2020, even faster than the approximately 36% rise seen in capital city rents^[11].

The situation in capital cities reversed dramatically with the return of overseas migration (discussed in a later section), leading to a severe rental crunch. By late 2023, Sydney’s rental vacancy rate had hit an all-time low of just 1.2% – representing roughly 66% fewer rentals listed than at the start of the pandemic^[12]. Nationally, rents rose an average of 37.6% since March 2020^[13], fueling significant affordability pressures. This rapid inflation in rental costs nationwide highlights the profound and lasting impact of these migration patterns on housing accessibility.

Interstate Migration Reshuffling: Winners and Losers

Beyond the simple urban-to-regional shift, the pandemic also intensified interstate migration patterns, leading to significant population reshuffles between states. This created distinct “winners” and “losers” in terms of population growth and, consequently, housing demand.

Queensland’s Unprecedented Influx

Queensland emerged as the undeniable beneficiary of interstate migration during the pandemic. In the year to September 2023, Queensland welcomed over 120,579 people, with a remarkable 32,625 net interstate arrivals^[3]. This figure was 170% higher than pre-COVID (2019) levels and propelled Queensland’s annual population growth to 2.7%, its fastest rate in over 15 years^[3]. This significant influx, particularly across the South East Queensland region, placed immense demand on the property market and underlying infrastructure. Brisbane, the Gold Coast, and the Sunshine Coast all experienced substantial price appreciation and population growth, transforming the state’s economic and social landscape.

New South Wales and Victoria: Net Outflows

Conversely, New South Wales and Victoria experienced net outflows of residents to other states during the initial pandemic period, particularly during lockdowns. These states, home to the two largest capital cities, saw internal migration trends reverse the long-standing pattern of population concentration. While specific numbers for interstate net outflow are subject to reporting periods, the general trend indicated a significant number of people moving out, primarily heading north to Queensland or to regional areas within their own states. This migration dynamic partially offset the otherwise robust demand in Sydney and Melbourne, providing a temporary reprieve from escalating prices compared to the booming interstate destinations.

The “Great Migration” was thus multifaceted, encompassing both urban-to-regional movement and significant interstate shifts. Its primary impact was a rapid and substantial rebalancing of Australia’s population distribution, with profound consequences for housing affordability, market dynamics, and infrastructure planning across the nation. While subsequent periods reintroduced overseas migration which led to a different dynamic, the initial pandemic-driven exodus laid the groundwork for this fundamental reshaping of Australian property values.

3. Regional Property Boom: Unprecedented Value Surges

The COVID-19 pandemic acted as an unexpected catalyst, sparking an internal migration phenomenon in Australia that profoundly reshaped the nation’s property landscape. As lockdowns were enforced and remote work became the norm, a significant exodus from the bustling capital cities to regional and coastal areas commenced, initiating an unprecedented boom in regional property values. This shift was not merely a temporary blip but rather a fundamental recalibration of housing demand and supply dynamics across Australia, leading to some of the most dramatic property value surges seen in decades in lifestyle-rich regional centres.

3.1 The Great Exodus: Capital City Outflows and Regional Inflows

The initial phase of the pandemic, particularly the period spanning 2020–21, witnessed a stark reversal of traditional population movements in Australia. For the first time in recent history, the combined capital cities experienced a net loss of population. Data reveals that Australia’s major metropolitan areas collectively lost over 25,000 people during this fiscal year, with Melbourne enduring the most significant outflow, experiencing a staggering reduction of approximately 60,500 residents, representing a 1.2% drop in its population^[1]. Sydney also recorded a net loss of 5,150 people during this period^[8].

Conversely, regional Australia became the beneficiary of this widespread urban flight. Over the same 2020–21 period, regional areas collectively gained around 70,900 people, demonstrating a seismic shift in residential preferences^[2]. This phenomenon, dubbed the “city exodus,” was largely driven by a combination of factors: the widespread adoption of remote work models, a desire for enhanced lifestyle amenities away from dense urban environments, and the pursuit of more affordable housing options. Individuals and families, no longer tethered to central business districts, sought out larger homes, greater open spaces, and closer proximity to nature, characteristics often associated with regional and coastal towns.

The magnetic pull of regional areas was not evenly distributed, however. Specific regions, particularly those offering desirable lifestyle attributes like beaches, national parks, and a relaxed pace of life, emerged as significant population magnets. For instance, the year 2021–22 saw the Gold Coast in Queensland attract a remarkable 11% of all metropolitan-to-regional movers, while the Sunshine Coast secured another 6%^[14]. Further south, Greater Geelong in Victoria captured 4% of these movers, with Wollongong and Newcastle in New South Wales attracting 3% and 2% respectively^[14]. Overall, Queensland’s regional areas captured a substantial 37% share of the net capital-city outflows, underscoring the powerful northward and lifestyle-oriented migration trend^[15].

Table 3.1: Net Internal Migration Trends (FY 2020–21)

This initial shift fundamentally altered the demand-supply equilibrium in these regional markets, setting the stage for the unprecedented value surges that followed.

3.2 Unprecedented Regional Property Value Surges

The substantial influx of urban residents into regional areas translated directly into extraordinary property value growth. Since March 2020, combined regional housing values across Australia have surged by an astonishing 56%^[3]. This figure significantly outpaced the 34% rise observed in capital city values over the same period, clearly demonstrating the disproportionate impact of the migration shift on regional markets^[3]. Nationally, home values registered an increase of approximately 38% since the pandemic’s onset, highlighting a considerable jump in housing wealth that far outstripped wage growth, consequently reducing overall affordability^[10].

Dozens of regional markets recorded double-digit annual price growth, with some even experiencing unprecedented spikes.

3.2.1 Case Studies: Byron Bay, Sunshine Coast, and Gold Coast

*

Byron Bay, NSW: The Epicentre of the “Tree Change” Boom

Once a laid-back, alternative coastal town, Byron Bay rapidly became an iconic symbol of the regional property boom, attracting affluent remote workers, investors, and even high-profile celebrities^[31]. The demand was so intense that in just 12 months to mid-2021, Byron Bay’s median house price soared by an astounding 90.9% year-on-year^[5]. This surge briefly positioned Byron Bay as the nation’s priciest market, surpassing even Sydney in median house prices^[5]. By 2022, the median house price in Byron Bay had broken the $3 million barrier^[25]. While prices have seen some moderation, settling around $2.4 million in late 2023, this still represents roughly double its pre-COVID value^[25]. This dramatic increase had significant social consequences, as many long-term local residents, such as landscaper Brad Reed, found themselves priced out of the community they had grown up in, with housing costs consuming “over three-quarters” of their income^[26]. This situation led to discussions about controlling holiday rentals to alleviate housing shortages^[27].
*

Sunshine Coast, QLD: Strategic Location and Lifestyle Appeal

The Sunshine Coast benefited immensely from interstate migration, particularly from Victoria and New South Wales. Along with the Gold Coast, it became a prime destination for city dwellers seeking a blend of coastal lifestyle and burgeoning economic opportunities. The Sunshine Coast’s home values are still approximately 37% higher than their pre-pandemic levels in March 2020, even after facing a 6.5% dip from their peak^[16]. The median house price in the Sunshine Coast reached a staggering seven figures, exceeding $1.1 million by late 2022^[28], illustrating the profound impact of sustained demand.
*

Gold Coast, QLD: A Persistent Migration Magnet

The Gold Coast firmly established itself as the leading destination for city-to-regional migrants, attracting 11% of all movers between cities and regions in 2021–22^[14]. This robust demand translated into substantial property value increases, with Gold Coast values remaining approximately 41.9% above March 2020 levels, despite a 7.4% decline from their peak^[17]. The consistent appeal of its beaches, entertainment, and employment opportunities fueled a property market boom that necessitated significant government investment in infrastructure to support the rapid population growth^[29].

Table 3.2: Selected Regional Market Value Changes Since March 2020

Beyond these prominent examples, numerous other regional towns experienced rapid escalation. Smaller towns like Finley (NSW) and Murrurundi (NSW) saw annual growth rates of 49% and 46% respectively, with dozens of other areas experiencing 40-50% growth fueled by the influx of often more affluent city dwellers and remote workers^[13]. This explosion in values unequivocally validated the term “regional property boom”.

3.3 Drivers of the Regional Boom: Remote Work and Lifestyle Aspirations

The primary drivers behind this unprecedented regional property boom are multifaceted, yet two overarching themes dominate: the rise of remote work and evolving lifestyle aspirations.

3.3.1 Remote Work Empowerment

The pandemic-induced shift to remote work was arguably the single most influential factor. For many professionals in capital cities, the necessity of daily commutes evaporated overnight. Companies quickly adopted technologies and policies to support working from home, proving that productivity could be maintained, or even enhanced, outside traditional office environments. This liberation from the office effectively untethered a significant portion of the workforce from geographical constraints. As a result:
* Geographic Flexibility: Workers gained the unprecedented flexibility to choose their residential location based on lifestyle preferences rather than proximity to the office. This directly fueled the “tree change” and “sea change” movements, as individuals sought more spacious homes, better natural environments, and a perceived improvement in quality of life.
* Increased Purchasing Power: Many city-based professionals, particularly those accustomed to higher salaries and housing costs in metropolitan areas, found their budgets stretched further in regional markets. This allowed them to compete aggressively for regional properties, often outbidding local buyers and contributing to the rapid price escalation.
* Lifestyle Towns Prioritised: Regional markets with existing lifestyle appeal – such as coastal towns, areas with strong natural beauty, or those known for arts and culture – saw the most significant demand. These areas offered the “best of both worlds”: a relaxed pace of life combined with the ability to maintain a city-based income. Eliza Owen of CoreLogic specifically noted that high-growth regional markets were characterized by their “lifestyle” appeal and suitability for remote work^[21].

3.3.2 Lifestyle Aspirations and Affordability Seeking

Beyond remote work, a deeper introspection among Australians during the pandemic contributed to altered lifestyle aspirations:
* Desire for Space and Nature: Lockdowns and social distancing measures highlighted the value of private outdoor space, larger homes, and access to nature. Regional areas typically offered more generous land sizes and closer proximity to beaches, national parks, and other recreational amenities compared to congested city living.
* Perceived Safety and Community: Some movers sought smaller, less population-dense communities, viewing them as safer havens during a global health crisis. The appeal of stronger community ties and a slower pace of life also played a role.
* Relative Affordability (Initially): While regional prices surged, many still offered a significant affordability advantage compared to Sydney and Melbourne, particularly in the initial phases of the migration. This allowed city dwellers to sell their expensive metropolitan properties, buy a more substantial regional home, and potentially reduce mortgage stress or free up capital for other investments. This was particularly true for Queensland, where housing was, on average, 40-50% cheaper than in Sydney/Melbourne pre-boom, creating substantial room for price appreciation^[30].
* Interstate Migration Trends: The pandemic amplified existing interstate migration trends, with Queensland being a prime example. The Sunshine State became a standout winner, attracting 32,625 net interstate migrants in the year to September 2023, contributing to its fastest population growth in over 15 years at 2.7%^[6]. This influx was 170% higher than pre-COVID levels in 2019^[12], significantly boosting property values and placing strain on infrastructure in areas like South-East Queensland.

These intertwined factors created a powerful impetus for internal migration, fundamentally altering housing demand patterns and triggering the regional property boom.

3.4 The Regional Supply Crunch

A critical factor exacerbating the regional property boom and sustaining price growth was the severe supply crunch. As demand soared, the available supply of housing in regional markets plummeted, creating intense competition among buyers and bidders.
* Depleted Listings: By late 2022, the number of properties listed for sale in regional Australia was a staggering 45% below pre-pandemic norms^[19]. In contrast, capital cities experienced a more modest 10% drop in listings over the same period^[19]. This acute shortage meant fewer options for aspiring regional buyers and significantly increased pressure on remaining stock.
* Extreme Scarcity: In some high-demand regional areas, such as the Barossa Valley in South Australia and the Darling Downs in Queensland, total listings remained 60-70% lower compared to pre-2020 levels^[20]. This extreme scarcity created fierce competition, with properties often receiving multiple offers, selling quickly, and frequently above asking price.
* Construction Lag: The regional construction sector, typically smaller and with less capacity than its metropolitan counterpart, struggled to keep pace with the sudden surge in demand for new housing. Planning and building approvals, along with actual construction, are inherently time-consuming processes. Increased costs for materials and labour during the pandemic further hindered the ability of regional builders to ramp up supply quickly.
* Short-Term Rentals Conversion: In popular tourist and lifestyle destinations, many homeowners converted residential properties into short-term holiday rentals (e.g., Airbnb), which were highly lucrative during the domestic tourism boom. This further reduced the available housing stock for long-term residents and exacerbated the rental crisis in these areas.

This chronic undersupply, combined with consistently high demand, acted as a powerful upward force on regional property values. Even as interest rates began to rise in 2022–2023, the inherent lack of available homes helped insulate regional prices to some extent, preventing a major correction in many instances.

3.5 Evolution and Outlook: A New Equilibrium

While the initial frenzy of the regional property boom has somewhat moderated, the underlying shifts have left a permanent mark on Australia’s housing landscape.
* Post-Boom Cooling and “Reverse Sea Change”: By late 2022 and 2023, regional markets experienced a cooling phase, primarily influenced by rising interest rates, which jumped from 0.1% to approximately 4.1% between May 2022 and mid-2023^[22]. This reduced buyer affordability and dampened activity. Consequently, combined regional home values experienced an overall decline of about 2.2% in 2022 from their April peak, though this was a milder correction compared to some capital cities^[23]. Areas that saw the most aggressive growth, such as coastal hotspots in NSW and QLD, experienced more significant dips (e.g., Sunshine Coast dipped ~6.5%, Gold Coast ~7.4% from peak)^[24]. There was also evidence of a “reverse sea change” in 2023, with a minority of city dwellers who had relocated returning to metropolitan areas, as employers began to demand hybrid or in-person office attendance^[7].
* Sustained, but Normalised, Regional Appeal: Despite this cooling, the appeal of regional living persists. As of late 2024, net migration into regional Australia continued to be 51% above pre-COVID averages^[20], indicating that the desire for a regional lifestyle remains a significant factor in housing decisions, albeit at a more sustainable pace than the pandemic peak. New regional hotspots have emerged further afield, beyond typical commuter belts, such as Gympie in Queensland and Wingecarribee in NSW, suggesting that affordability pressures are driving movers to explore wider geographies^[21]. Albury in NSW saw a remarkable 16-fold increase in net capital-city migrants in the year to June 2025, underscoring this trend^[26].
* Enduring Impact and New Price Tiers: Popular regional enclaves remain significantly pricier, often 30-50% higher than pre-COVID levels, even after recent corrections^[19]. This indicates a permanent re-setting of value benchmarks in many regional locations. The pandemic has effectively ushered many mid-tier regional cities and outer suburban areas into a new price tier, as exemplified by Brisbane’s median house price crossing the $1 million mark for the first time^[20].
* Rental Market Pressures: The regional boom also amplified an existing rental crisis. Regional rents have jumped over 40% since March 2020^[12], outpacing capital city rental growth, creating acute affordability issues for tenants. This was driven by a tightening of rental vacancies, as properties were sold to owner-occupiers or converted to short-term accommodation.
* Infrastructure and Policy Challenges: Governments and policymakers are now grappling with the long-term consequences of this demographic shift. Rapid population growth in regions has strained existing infrastructure, from roads and public transport to schools and healthcare. Queensland, for example, has committed to a $32 billion transport plan to address the “unprecedented” strain on its infrastructure due to its soaring population^[29]. Addressing housing supply, improving infrastructure, and ensuring affordability in these burgeoning regional centres are critical challenges that will continue to shape Australia’s property market in 2026 and beyond.

In essence, the regional property boom was a transformative period, driven by a convergence of pandemic-induced changes and evolving socio-economic preferences. While the initial explosive growth has tempered, the reshaped demand patterns and elevated price points in many regional markets represent a lasting impact on Australia’s property values, necessitating careful planning and investment to manage this new equilibrium.

(Transition to next section: The dramatic shifts in regional property values also had a profound, albeit delayed, impact on capital city markets, particularly as international borders reopened and overseas migration returned with a vengeance, creating a dynamic rebalancing act discussed in detail in the following section.)

Prepared for Mick White. Explore the Real Estate section of our website for additional reports and articles.

References

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10. www.abc.net.au. (n.d.). Charts show how Australia’s housing market has changed since COVID – ABC News. Retrieved from https://www.abc.net.au/news/2025-03-14/charts-show-how-the-housing-market-has-changed-since-covid/105052772#:~:text=Home%20values%20nationally%20rose%20by,since%20the%20pandemic%20took%20hold
11. statements.qld.gov.au. (n.d.). Overseas and interstate migration contributes to 229,000 extra daily trips on Queensland roads, bus, rail and active networks – Ministerial Media Statements. Retrieved from https://statements.qld.gov.au/statements/100383#:~:text=Queensland%20is%20experiencing%20the%20fastest,particularly%20across%20the%20South%20East
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13. www.realestate.com.au. (n.d.). Byron Bay replaces Sydney as priciest major market to buy Aussie house – realestate.com.au. Retrieved from https://www.realestate.com.au/news/byron-bay-replaces-sydney-as-priciest-major-market-to-buy-aussie-house/#:~:text=HOUSES
14. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=Top%20,of%20migration
15. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=according%20to%20the%20quarterly%20report,released%20last%20month
16. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=CoreLogic%20figures%20show%20the%20sunshine,19
17. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=April%2C%20declining%20more%20substantially%20than,Ms%20Owen%20says
18. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=April%2C%20declining%20more%20substantially%20than,Ms%20Owen%20says
19. www.savings.com.au. (n.d.). Regional property prices declined 2.2% in 2022, faring better than capital cities. Retrieved from https://www.savings.com.au/news/proptrack-regional-property-report-2022#:~:text=PropTrack%20revealed%20the%20number%20of,pandemic%20averages%20for%20capital%20cities
20. www.savings.com.au. (n.d.). Regional property prices declined 2.2% in 2022, faring better than capital cities. Retrieved from https://www.savings.com.au/news/proptrack-regional-property-report-2022#:~:text=Ms%20Creagh%20noted%20the%20regional,region%20in%20QLD%20declining%2067
21. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=Despite%20recent%20price%20falls%2C%20CoreLogic%27s,%28ABC%20News%3A%20John%20Gunn
22. www.savings.com.au. (n.d.). Regional property prices declined 2.2% in 2022, faring better than capital cities. Retrieved from https://www.savings.com.au/news/proptrack-regional-property-report-2022#:~:text=match%20at%20L16%20Since%20peaking,2
23. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to%20the-regions-data-shows-region-growth/101812670#:~:text=CoreLogic%20figures%20show%20the%20sunshine,19
24. www.abc.net.au. (n.d.). The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit – ABC News. Retrieved from https://www.abc.net.au/news/2023-01-01/covid-19-stirred-a-flock-to-the-regions-data-shows-region-growth/101812670#:~:text=April%2C%20declining%20more%20substantially%20than,Ms%20Owen%20says
25. www.realestate.com.au. (n.d.). The ‘Golden Grid’: Is Byron Bay’s property market taking off again? – realestate.com.au. Retrieved from https://www.realestate.com.au/news/the-golden-grid-is-byron-bays-property-market-taking-off-again/#:~:text=there%20are%20early%20signs%20the,about%20to%20take%20off%20again
26. www.abc.net.au. (n.d.). Byron Bay property prices push local workers out of town – ABC News. Retrieved from https://www.abc.net.au/news/2021-04-29/byron-bay-property-prices-push-workers-out-of-town/100104052#:~:text=Brad%20Reed%20grew%20up%20in,%28ABC%20News%3A%20Shaun%20Kingma
27. www.abc.net.au. (n.d.). Byron Bay property prices push local workers out of town – ABC News. Retrieved from https://www.abc.net.au/news/2021-04-29/byron-bay-property-prices-push-workers-out-of-town/100104052#:~:text=,he%20said
28. www.savings.com.au. (n.d.). Regional property prices declined 2.2% in 2022, faring better than capital cities. Retrieved from https://www.savings.com.au/news/proptrack-regional-property-report-2022#:~:text=%E2%80%9CQueensland%20is%20still%20home%20to,to%20October%202022%2C%E2%80%9D%20she%20said
29. statements.qld.gov.au. (n.d.). Overseas and interstate migration contributes to 229,000 extra daily trips on Queensland roads, bus, rail and active networks – Ministerial Media Statements. Retrieved from https://statements.qld.gov.au/statements/100383#:~:text=Queensland%20is%20experiencing%20the%20fastest,particularly%20across%20the%20South%20East
30. www.abc.net.au. (n.d.). Charts show how Australia’s housing market has changed since COVID – ABC News. Retrieved from https://www.abc.net.au/news/2025-03-14/charts-show-how-the-housing-market-has-changed-since-covid/105052772#:~:text=During%20that%20same%20period%2C%20capital,6%20per%20cent
31. www.realestate.com.au. (n.d.). Byron Bay replaces Sydney as priciest major market to buy Aussie house – realestate.com.au. Retrieved from https://www.realestate.com.au/news/byron-bay-replaces-sydney-as-priciest-major-market-to-buy-aussie-house/#:~:text=Among%20the%20price%20drivers%20in,of%20cashed%20up%20home%20buyers

4. Interstate Migration and State-Level Market Reshaping

The COVID-19 pandemic acted as an unprecedented catalyst, triggering a profound reshuffling of Australia’s population. Far from being a uniform national trend, the “great migration” manifested as significant interstate population shifts, driven by a complex interplay of lifestyle preferences, economic imperatives, and the sudden normalization of remote work. This dynamic movement, particularly the record net migration to Queensland and Western Australia alongside net outflows from New South Wales and Victoria, dramatically reshaped property demand and market performance across different states, leaving an indelible mark on Australia’s real estate landscape in 2026.

The period spanning 2020 to 2023 witnessed a fundamental re-evaluation of living arrangements and priorities for many Australians. Lockdowns, travel restrictions, and the ability to work remotely prompted a mass exodus from densely populated capital cities to regional and coastal areas. This internal migration was not merely a shift within states but translated into substantial cross-border movements, altering the demographic and economic profiles of states, and consequently, their property markets. While the initial surge was primarily from cities to regions, the later reopening of international borders introduced a counter-current, with record overseas migration revitalizing capital cities and further complicating the national housing narrative. This section delves into the specifics of these interstate flows, analyzing the “winners” and “losers” in terms of population gain, and detailing how these movements translated into localized property booms, affordability challenges, and ultimately, a long-term recalibration of property values and market dynamics across the Australian federation.

### 4.1 The Pandemic Exodus: Capital City Outflows and Regional Inflows

The early stages of the pandemic, particularly the financial year 2020–21, saw an extraordinary internal migration event. Australia’s combined capital cities collectively experienced a net loss of over 25,000 people ^[1]. This was a historic reversal, largely attributable to stringent COVID-19 lockdowns and the newfound flexibility of remote work. Melbourne, in particular, bore the brunt of this exodus, losing approximately 60,500 people, representing an unprecedented 1.2% drop in its population ^[2]. Sydney also recorded a net outflow, albeit smaller, with a loss of 5,150 residents during the same period ^[2].

Conversely, regional Australia observed a substantial population gain, attracting around 70,900 new residents ^[1]. This “city exodus” channelled housing demand and activity away from the traditional metropolitan centres and into lifestyle towns and smaller cities. The allure of more space, reduced housing costs, and a perceived safer environment away from urban congestion drove this trend. Many individuals and families, empowered by the shift to remote work, sought to swap high-density urban living for coastal or country lifestyles.

The impact on regional property markets was immediate and dramatic. Regional housing values surged by approximately 56% since March 2020, significantly outpacing the 34% rise observed in capital city values over the same timeframe ^[3]. This marked a profound departure from pre-pandemic trends, where capital cities typically commanded higher growth rates. Dozens of regional markets registered double-digit annual price growth, a testament to the influx of remote workers and city evacuees. Some niche, highly sought-after areas, such as Byron Bay, even saw house prices double within a single year, reaching record highs ^[4].

The redistribution of population during this period was not uniform across all regional areas. Analysis reveals that Queensland’s regions captured the largest share of net capital-city outflows, accounting for a substantial 37% ^[10]. This highlights a clear northward and lifestyle-driven migration pattern. Specific hotspots became magnets for movers:

• Gold Coast, QLD: Attracted 11% of all metro-to-regional movers in 2021–22 ^[9].
• Sunshine Coast, QLD: Drew 6% of movers ^[9].
• Greater Geelong, VIC: Saw 4% of movers ^[9].
• Wollongong, NSW: Accounted for 3% of movers ^[9].
• Newcastle, NSW: Attracted 2% of movers ^[9].

This concentration of demand in specific regional lifestyle markets resulted in localized price explosions. For example, Sunshine Coast home values remained approximately 37% higher than pre-pandemic levels (March 2020), even after a 6.5% dip from their peak ^[11]. The Gold Coast saw values stay roughly 41.9% above March 2020 levels, following a 7.4% peak-to-trough decline ^[12]. Similarly, the Richmond-Tweed region (encompassing Byron Bay) exhibited values that were still a significant 24% above pre-COVID levels ^[13], underscoring the enduring impact of the pandemic migration on regional property pricing.

The peak of this regional property boom saw some rural and coastal towns experiencing unprecedented annual price jumps. In mid-2021, Byron Bay’s median house price soared by an astonishing 90.9% year-on-year ^[14], momentarily surpassing Sydney as Australia’s most expensive place to buy a house. This was driven by an influx of affluent remote workers and city dwellers, rapidly escalating local property values. Dozens of smaller towns across regional Australia, such as Finley (+49%) and Murrurundi (+46%), also recorded annual growth rates of 40-50% ^[15].

The intensity of this regional housing boom was further amplified by a critical limitation in supply. By late 2022, the number of properties listed for sale in regional Australia was a staggering 45% below pre-pandemic norms ^[16]. This contrasted sharply with a significantly lower 10% drop in listings observed in capital cities ^[16]. In some particularly high-demand country areas, such as Barossa in South Australia and Darling Downs in Queensland, total listings remained 60–70% below pre-2020 levels ^[17]. This severe inventory shortage created intense competition among buyers and served to insulate prices, even in the face of rising interest rates.

### 4.2 Interstate Migration: Winners and Losers in the State Landscape

The pandemic not only drove a city-to-region movement but also significantly reconfigured interstate population flows, elevating existing trends and creating new dynamics.

4.2.1 Queensland and Western Australia: The Dominant Beneficiaries

Queensland emerged as the undeniable winner in the interstate migration reshuffle. The state experienced record net inflows, as individuals and families from New South Wales and Victoria sought out its lifestyle advantages and relatively more affordable property. In the year leading up to September 2023, Queensland gained approximately 32,625 net interstate migrants ^[5]. When combined with overseas arrivals, a total of 120,579 people moved to Queensland in that period ^[5]. This influx represented a staggering 170% increase compared to pre-COVID (2019) levels and propelled Queensland’s annual population growth rate to 2.7% – its fastest in over 15 years ^[6].

This sustained demand translated directly into booming property markets across Queensland. Brisbane’s median house price, for instance, climbed around 42% in the three years to 2023, surpassing the $1 million mark for the first time by 2025 ^[24]. Coastal Queensland markets like Bundaberg and Rockhampton also displayed robust performance, registering annual price growth exceeding 12% in 2023, placing them among Australia’s highest-performing regional areas ^[25]. The South-East Queensland region, particularly the Gold Coast and Sunshine Coast, experienced rapid price appreciation, with Brisbane’s annual house price growth peaking at about 30% in late 2021 ^[28]. The Sunshine Coast’s median house price reached seven figures (approximately $1.1 million) by late 2022 ^[29], and despite a slight moderation, values in the region remained 37% above pre-2020 levels ^[11].

Western Australia also benefited from this reordering of population flows. Its comparatively open economy and minimal direct impact from COVID-19 restrictions made it an attractive destination. Perth’s population grew by 3.6% in 2022–23, marking the fastest growth rate among capital cities in the nation ^[26]. This boosted property demand in Perth itself and in regional WA towns like Albany and Bunbury, which recorded annual price increases of around 15% ^[27].

4.2.2 New South Wales and Victoria: Experiencing Outflows

In stark contrast to Queensland and Western Australia, Australia’s two largest states, New South Wales and Victoria, experienced net losses of residents to other states during the initial pandemic phase. Victoria was particularly affected by its extended lockdowns in Melbourne. Many residents opted to relocate to regional Victoria, Queensland, or other states. Victoria recorded negative interstate migration for several consecutive years, including a loss of 18,300 people in 2020–21, only returning to a small net gain by late 2023 ^[21]. New South Wales also reported net interstate losses, with approximately 16,000 residents leaving the state in 2020–21, many heading north or to regional NSW ^[21].

This significant out-migration contributed to a cooling effect on property demand in Sydney and Melbourne, particularly when compared to the surging markets in Brisbane or Adelaide. For instance, Sydney’s housing values exhibited a slower growth of approximately 28% between 2020 and 2022, while Brisbane’s values surged by about 47% during the same period ^[22].

4.2.3 Demographic and Economic Drivers

The interstate population shuffle was fuelled by both lifestyle aspirations and pragmatic economic considerations. Remote-working professionals seized the opportunity to move to regions with better climates or closer to family. Retirees accelerated “sea-change” plans, while younger families often exited expensive capitals in pursuit of larger homes and reduced living costs elsewhere. Queensland’s sustained appeal was partly rooted in its comparative affordability; pre-boom, its housing was, on average, 40-50% cheaper than that of Sydney or Melbourne, providing significant room for capital growth ^[23]. Even states like South Australia and Tasmania, though smaller, experienced modest population gains from interstate migration, which bolstered their local property markets, as evidenced by significant price surges of over 25% in Adelaide and Hobart between 2020 and 2022 ^[23].

The high influx of residents into receiving markets placed immense pressure on local infrastructure and services. South-East Queensland’s rapid price appreciation led to increased construction, but also confronted local authorities with challenges. The Queensland government acknowledged “unprecedented” strain on roads and public transport, leading to the launch of a $32 billion infrastructure plan in response to the region’s 2.7% population growth in 2023 ^[50]. While this created financial windfalls for existing property owners and a boost for the construction sector, it simultaneously eroded affordability for long-term locals and newcomers alike, exacerbating the cost of living in once-affordable beachside communities.

Conversely, the source states (NSW, VIC) initially experienced some easing in rental vacancies during lockdowns and slightly less competition in their housing markets. However, this relief proved temporary. As interstate migration patterns begin to normalise, the significant geographical redistribution of housing demand is likely to be a lasting legacy, with many new residents now permanently settled outside their former metropolitan hubs.

### 4.3 The Urban Comeback: Overseas Migration and City Revitilisation

By 2022–23, the pendulum began to swing back towards the capital cities, driven by the reopening of Australia’s international borders and a record surge in overseas migration. The re-engagement with the global community brought about a substantial shift in demographic trends.

4.3.1 Record Overseas Migration Fuels Capital City Growth

Following two years of border closures, Australia witnessed an unprecedented resurgence in overseas migration starting from mid-2022. In the calendar year 2022, the nation added a record 387,000 net migrants, marking the highest annual influx ever recorded ^[30]. This massive influx comprised international students, skilled workers, and returning expatriates, and almost instantaneously reignited housing demand in Australia’s major cities. Overall, Australia’s total population grew by 1.9% in 2022, adding approximately 497,000 people ^[31], with growth accelerating further into 2023.

The capital cities absorbed the vast majority of these newcomers. By the financial year 2022–23, Sydney’s population growth reached 2.8%, while Melbourne’s soared to 3.3% ^[32]. Each city added over 150,000 people within a single year ^[33], a dramatic reversal from the declines observed in 2020–21. Inner-city precincts, particularly those reliant on student populations and office workers, which had seen significant depopulation during the pandemic, rapidly refilled. For example, Melbourne’s CBD, where rental vacancy rates had spiked above 10% in 2020 ^[34], saw a strong recovery as international students returned en masse, with more overseas students in Melbourne by 2023 than pre-pandemic levels.

This renewed urban vitality led to a resurgence in capital city housing markets in 2023. Despite the backdrop of rising interest rates, Sydney’s dwelling values climbed by about 6% in 2023 ^[35] after a dip in 2022, and Melbourne transitioned from negative growth to modest gains. Many capital cities recorded their largest quarterly price increases in late 2023 and early 2024 since the pandemic-driven boom. The combined capital cities experienced approximately 1.0% growth in home values during the January 2024 quarter, surpassing regional growth ^[36]. Investor activity also saw a notable pickup in cities, driven by anticipation of sustained rental demand from the growing migrant population.

4.3.2 City Rental Crisis Intensifies

The rapid influx of new residents into capital cities, compounded by existing construction lags and a dwindling supply pipeline, precipitated a severe rental affordability crisis. By early 2023, vacancy rates in major cities like Sydney and Melbourne had plummeted to near-record lows, hovering around 1%–1.5% ^[37]. This marked a stark contrast to the 5–10% vacancy highs seen in 2020 ^[38].

The consequences were immediate and substantial: rents in Sydney surged by approximately 20% in 2022–23 alone, with similar increases observed in Melbourne and Brisbane. Sydney’s median unit rent, for example, exceeded $600 per week in 2023, setting a new record. This rapid rental inflation disproportionately affected younger and lower-income tenants, effectively pricing many out of central areas or forcing them into longer commutes. The market dramatically shifted from a “renter’s market” in 2020, where landlords offered incentives, to an extremely tight “landlord’s market” by 2023, as migration-driven demand far outstripped available supply ^[39].

4.3.3 Economic and Policy Implications

The swift return of migrants presented a double-edged sword for Australia. On one hand, it revitalized urban economies, boosting sectors such as hospitality, education, and retail, and alleviating labour shortages. On the other hand, it starkly exposed Australia’s chronic housing supply constraints. The record population growth of 2022–23 collided with a limited supply of new housing stock, propelling both prices and rents to unprecedented levels.

Policymakers are now grappling with the challenge of sustainably accommodating high migration levels. Ongoing debates centre around strategies to rapidly increase housing construction, potential decentralisation of growth to regional cities, and adjustments to immigration settings to mitigate the impact on property markets and critical infrastructure. The sheer scale and speed of this demographic shift necessitate urgent and integrated policy responses to address the mounting affordability crisis.

### 4.4 Regional Market Resilience and the “Reverse Sea Change”

While capital cities experienced a vigorous rebound fueled by overseas migration, regional markets began to undergo a period of adjustment. The frenetic pace of the regional property boom, characteristic of 2020-2022, started to cool by late 2022 and throughout 2023.

4.4.1 Post-Boom Cooling and Interest Rate Impact

The primary factor influencing this shift was the successive interest rate hikes initiated by the Reserve Bank of Australia, which saw rates climb rapidly from 0.1% to roughly 4.1% between May 2022 and mid-2023. This significant increase in borrowing costs cooled buyer sentiment and reduced purchasing power across all property markets, with regional areas being no exception. CoreLogic data indicated that regional home values recorded an overall decline of approximately 2.2% in 2022 after reaching their peak in April ^[40]. While this was a milder correction compared to some capital cities experienced in 2022, it marked a clear break from the preceding boom.

Coastal hotspots that had experienced the most rapid growth witnessed the most noticeable corrections. For instance, the Richmond-Tweed region in NSW (Byron Bay area) saw values decline by around 15% from its 2022 peak, and Queensland’s Sunshine Coast dropped approximately 6.5% ^[41]. Despite these moderations, prices in these areas remained significantly above pre-pandemic levels. The exuberance subsided, and growth returned to more sustainable, albeit slower, rates.

4.4.2 The Nuance of “Reverse Sea Change”

Another contributing factor to the regional cooling was the subtle emergence of a “reverse sea change” trend. As many employers began to enforce hybrid or full-time in-person work arrangements in 2023, the viability of extreme commutes from remote regional areas diminished for some. A small segment of pandemic-era tree-changers opted to return to metropolitan areas ^[42]. While this phenomenon was noted by analysts, data confirmed that metropolitan-to-regional migration continued to far outweigh regional-to-metropolitan shifts. As of late 2024, there were still “32% more people moving from big cities to regions than in the opposite direction,” with net migration into regional Australia remaining 51% above pre-COVID average levels ^[43].

Areas located within a 1-2 hour drive of major capitals, particularly coastal NSW and QLD, experienced the most noticeable price softening, suggesting a partial unwinding of the speculative premium driven by pandemic urgency.

4.4.3 Market Equilibrium and New Hotspots

Crucially, this cooling phase was not a market crash. By mid-2024, regional real estate appeared to be stabilising at a new, elevated plateau. Many regional areas retained the majority of their pandemic-driven gains, with regional home values, on average, still around 30% higher than pre-2020 levels as of early 2025, even after the recent dip ^[44]. Sales volumes in regional markets reverted to more typical levels, and buyers found slightly more negotiating leverage compared to the highly competitive environment of 2021. Where prices did fall, it often reflected a normalisation after an overextension, as exemplified by Byron Bay’s median house price easing from approximately $3 million at its peak to around $2.4 million in late 2023 ^[45], still nearly double its pre-COVID value. Regions with diverse local economies and strong lifestyle appeal demonstrated greater resilience in holding value.

An interesting development in 2024–25 was the emergence of new regional migration hotspots located further afield, beyond the traditional commuter belts. The Regional Movers Index highlighted areas such as Gympie in Queensland and East Gippsland in Victoria gaining popularity, as movers sought affordability and lifestyle in less conventional destinations ^[46]. The NSW border city of Albury, for instance, recorded an astonishing 16-fold increase in net capital-city migrants in the year to June 2025 ^[47]. This indicates a sustained interest in regional relocation, albeit spread across a broader geographical range, suggesting that affordability concerns are increasingly guiding relocation decisions.

4.4.4 Long-Term Structural Shifts

The regional housing market has undergone a structural transformation due to the pandemic. The “regional renaissance” has proven to be a durable trend; widespread telecommuting means a significant portion of the workforce can operate remotely, sustaining demand for regional living. Businesses and government entities are increasingly exploring decentralisation. Future regional property growth, however, is expected to be more fundamentally driven by factors such as local job markets, infrastructure development, and relative affordability, rather than the immediate urgency of the pandemic. Regional communities are now actively advocating for improved services and connectivity to accommodate their expanded populations, indicating a maturation of these markets.

### 4.5 Housing Supply and Affordability Challenges Across All States

The combined effect of mass internal migration and the subsequent return of record overseas migration has created significant housing supply and affordability challenges across all Australian states. This crisis has become a defining characteristic of Australia’s post-pandemic property landscape.

4.5.1 Persistent Supply-Demand Imbalance

The rapid pace of population movement and growth over the past few years has profoundly outstripped Australia’s housing supply capabilities. During the initial regional boom, property listings plummeted to record lows; in some regions, available properties were 40-50% below normal levels ^[16]. Homes were quickly absorbed, and new construction struggled to keep pace. Exacerbating this was a decline in new housing approvals in 2022–23, driven by rising interest rates and escalating construction costs, even as demographic demand remained robust. This persistent imbalance between supply and demand has been a primary driver of upward pressure on both property prices and rents across the nation.

4.5.2 The Gripping Rental Crisis

The most acute manifestation of this supply-demand mismatch is the ongoing rental crisis. Virtually every part of Australia is experiencing extremely low rental vacancy rates, often hovering around 1% ^[18], indicating an extraordinarily tight market. Regional towns, which historically offered an abundance of rental options, now have scarce availability. This is partly because many rental properties were acquired by owner-occupiers or converted into lucrative short-term rentals during the pandemic boom.

Capital cities, following a brief period of eased pressure in 2020, are now contending with unprecedented rental demand. Sydney and Melbourne, for instance, experienced drastic plunges in rental listings as tens of thousands of returning migrants and international students competed for limited housing ^[19]. Consequently, median rents in some cities have reached all-time highs; Sydney’s median unit rent surpassed $600 per week in 2023, an unprecedented figure ^[20]. This rapid rent inflation has severely impacted lower-income households and younger renters, often pricing them out of certain cities or forcing them into less convenient locations.

4.5.3 Affordability, Inequality, and Economic Disparity

The pandemic-induced migration and property boom have had complex, often contrasting, effects on housing affordability and social equity. While existing homeowners in regional and smaller cities have seen substantial equity gains, aspiring first-home buyers face a significantly higher entry barrier. The traditional price gap between capital cities and regional areas has narrowed considerably, diminishing the “affordable alternative” appeal of many regional centres. For example, the median house price in a regional city like Ballarat or Townsville can now be comparable to or even exceed that of some outer suburbs of Sydney or Melbourne, a departure from pre-2020 norms.

This erosion of regional affordability disproportionately affects local communities. In popular regional areas such as Byron Bay and Noosa, long-term residents and essential service workers have been priced out by wealthier incomers, exacerbating local inequality. This can lead to labour shortages, as businesses struggle to find staff who can afford to live locally.

4.5.4 Policy Responses and Future Outlook

Governments and industry stakeholders are actively developing responses to these multifaceted challenges. State governments have introduced or expanded incentives for rural home ownership, such as grants or stamp duty concessions, to assist locals and first-home buyers. A strong emphasis is also being placed on increasing housing supply. NSW is promoting development in regional centres and streamlining rezoning processes, while Queensland has announced substantial housing investments in high-growth corridors. The Commonwealth’s housing accord aims to construct 1.2 million new homes over five years, prioritising areas of high demand.

However, supply-side solutions inherently require time to bear fruit, and immediate demand will likely continue to outstrip new housing stock. In the interim, various measures are being explored to alleviate rental pressures, including increased rent assistance and potential limitations on short-term rentals in popular tourist areas.

Businesses are also adapting to this new geographical distribution of talent and consumers. Real estate developers are identifying opportunities in secondary cities and larger regional towns to construct new housing and commercial spaces. Employers, recognising the shift in workforce locations, are establishing satellite offices or regional hubs to attract and retain talent who prefer non-metropolitan living. Infrastructure development, including road, rail, and internet connectivity, is being accelerated to support these growing regional and outer-suburban areas.

In the long term, the aspiration is that more distributed population growth will ease pressure on the largest cities and enhance overall quality of life across Australia. However, this hinges critically on the ability of housing supply and infrastructure to align with these demographic shifts. The post-pandemic “great migration” has fundamentally altered Australia’s demographic and property landscape, creating both innovative opportunities and significant challenges that will continue to shape markets in 2026 and beyond.

The next section will specifically delve into the profound impact of these demographic shifts on rental markets across Australia, examining the dynamics of vacancy rates, rental price increases, and the ensuing affordability crisis.

Table 4.1: Key State-Level Demographic and Property Market Shifts (2020-2023)

(Transition to next section: The intricate dynamics of interstate migration have undoubtedly reshaped Australia’s property landscape. However, nowhere are these shifts felt more acutely than in the country’s rental markets, which have been thrust into an unprecedented period of volatility and crisis, a topic we will explore in detail in the following section.)

5. The Urban Rebound: Impact of Overseas Migration 2022-2023

The COVID-19 pandemic triggered an unprecedented and immediate shift in Australia’s demographic landscape and, consequently, its property markets. In the initial phases of the pandemic, particularly during 2020-2021, Australian capital cities experienced a significant exodus, primarily driven by strict lockdowns, the abrupt halt of international migration, and the newfound flexibility of remote work. This “city exodus” saw over 25,000 people depart combined capital cities in 2020-21, with Melbourne alone losing an astonishing 60,500 residents (a 1.2% decline) as regional areas collectively gained approximately 70,900 people ^[1], ^[2]. Regional housing values subsequently surged by an impressive 56% since March 2020, far outstripping the 34% rise observed in capital city values during the same period ^[3].

However, as Australia transitioned out of its most restrictive pandemic settings and its international borders began to reopen in late 2021 and fully in 2022, a dramatic rebalancing act commenced. This section delves into the profound urban rebound experienced by Australia’s major capital cities from 2022 to 2023, driven primarily by record levels of overseas migration. We will examine the rapid population growth in key metropolitan centres like Sydney and Melbourne, analyse the subsequent revitalisation of their urban property and rental markets, and discuss the complex interplay between this urban resurgence and the previously booming regional markets. This dynamic period marks a pivotal moment in understanding the long-term reshaping of Australian property values, moving from a regional-led boom to a renewed, migration-fueled metropolitan ascendancy.

5.1 The Reopening of Borders and the Influx of Overseas Migrants

The Australian government’s decision to reopen international borders post-pandemic served as the primary catalyst for the dramatic reversal of urban population trends. After two years of effectively closed borders, which saw net overseas migration plunge to negative levels, the floodgates reopened, triggering a monumental surge in arrivals.

5.1.1 Record Population Growth in Capital Cities

The impact of this policy shift was almost immediate and overwhelming, particularly for the capital cities. In the financial year (FY) 2022-23, Australia’s combined capital cities recorded an astounding population increase of **517,200 people**, representing a 3.0% growth rate ^[7], ^[8]. This figure constitutes the largest annual population gain ever recorded for Australia’s capital cities since the series began in 1971 ^[8]. The Australian Bureau of Statistics (ABS) confirmed that this unprecedented growth was overwhelmingly driven by net overseas migration ^[7].

The sheer scale of this influx is further highlighted by the overall national population figures. In calendar year 2022, Australia’s population increased by a record 496,800 people, or 1.9% ^[19]. Of this, net overseas migration accounted for approximately 387,000 individuals, representing a staggering 78% of the total population growth ^[20]. This rapid rebound effectively compensated for the population losses experienced during the pandemic years.

Melbourne and Sydney, the two largest cities, bore the brunt and the benefit of this migration wave. Melbourne, which had suffered significant population losses during lockdowns, registered an increase of 167,500 people in FY 2022-23. Similarly, Sydney added 146,700 people during the same period ^[9]. These figures represent the biggest annual population gains on record for both cities ^[9], marking a stark contrast to their earlier declines. Perth also experienced remarkable growth, with its population expanding by 3.6% in 2022-23, the fastest rate nationally ^[42].

5.1.2 Demographic Composition of the Influx

The overseas migration influx was diverse, yet highly concentrated on key demographics that traditionally favour urban centres:

• International Students: A significant proportion of the new arrivals were international students, many of whom had deferred or were awaiting the reopening of borders. These students predominantly settle in major university cities like Sydney, Melbourne, and Brisbane, driving demand for inner-city apartments and shared accommodation. For instance, central Melbourne, which saw its rental vacancy spike above 10% in 2020 as students and temporary residents left ^[10], saw this figure plummet as international students returned en masse by late 2022. By 2023, Melbourne hosted more overseas students than it did pre-pandemic, directly contributing to renewed urban demand.
• Skilled Workers: Many skilled workers also arrived, drawn by job opportunities in sectors experiencing labour shortages. These individuals often seek employment and housing in major economic hubs.
• Returning Expats: Australian citizens and permanent residents who had been overseas during the pandemic also returned, contributing to the urban population increase.

This rapid demographic shift underscore the fundamental role of overseas migration in Australia’s urbanisation trajectory and its immediate, tangible effects on metropolitan areas.

5.2 Revitalisation of Urban Property and Rental Markets

The sudden and substantial increase in urban populations had an immediate and profound impact on capital city property markets, particularly in the rental sector.

5.2.1 Rental Market Transformation: From Glut to Crisis

The trajectory of metropolitan rental markets from 2020 to 2023 was nothing short of a rollercoaster.

Initial Pandemic Period (2020-2021)

During the peak of the pandemic and associated lockdowns, many inner-city areas, especially those reliant on international students and backpackers, saw rental vacancies soar. In instances such as Melbourne’s CBD, vacancy rates spiked above 10% ^[10]. This created a tenant’s market, with landlords often offering incentives or reducing rents to secure occupants. For example, Sydney’s rental listings were significantly higher during this period.

Post-Reopening Period (2022-2023)

The deluge of new international migrants, temporary residents, and returning workers drastically reversed this trend. With a limited supply of new housing and an exponentially growing tenant pool, vacancy rates plummeted to historic lows across major capitals, resulting in an acute rental crisis.
By late 2023, Sydney’s rental vacancy rate had plunged to an all-time low of **just 1.2%** ^[11]. This figure signifies approximately **66% fewer rentals listed** compared to the beginning of the pandemic ^[11]. Melbourne experienced a similar dramatic turnaround, with inner-city vacancy rates returning to near 1% by 2023 ^[10].

This severe supply-demand imbalance led to rapid and substantial rent increases:

• Nationwide, rents jumped by **37.6%** since March 2020 ^[12], growing nearly six times faster than in the preceding five years.
• Capital city rents increased by approximately 36% during the same period ^[14].
• Perth recorded the most significant rent surge among all regions, with a **63.9% increase** or an additional ~$274 per week to median rent, since March 2020 ^[15].

In total, Australia’s rental vacancy rate hit **1.6% in 2023**, considerably below the 10-year average, indicating an exceptionally tight market ^[16]. This rapid rent inflation has created significant affordability pressures for tenants, pushing some out of their preferred locations or into financial hardship.

5.2.2 Residential Property Market Rebound

The resurgence of population growth, coupled with other demand-side factors (such as the initial expectation of interest rate peaks), injected new energy into capital city housing markets in 2023. This marked a significant shift from 2022, when many metropolitan areas experienced price corrections following earlier boom conditions.

• Momentum Shift: Capital city housing markets regained significant upward momentum in 2023. While overall Australian home prices are up approximately 38% since the pandemic began ^[4], this phase saw the capitals taking the lead.
• Price Growth Rates: From January to November 2023, combined capital city home prices rose by **5.95%** from their late-2022 low ^[30]. This growth significantly outpaced the regions, which saw only a 2.43% increase during the same period ^[30].
• Specific City Performance: Sydney dwelling values climbed about 6% in 2023 ^[51], recovering after experiencing a dip in 2022. Melbourne transition from negative growth to modest gains. Many cities recorded their largest quarterly price rises in late 2023 to early 2024. For instance, CoreLogic data shows combined capital city home values rose approximately 1.0% in the January 2024 quarter, slightly ahead of regional growth ^[52].
• Investor Activity: The return of migrants and the accompanying rental crisis also spurred a renewed interest from investors, who anticipated continued strong rental yields and capital growth potential in metropolitan areas.

This urban resurgence, alongside return-to-office trends where hybrid work models became more common, reinvigorated demand for metropolitan property and rentals, creating a seller’s market in many areas.

5.3 The Interplay and “Reverse Sea Change”

While capital cities experienced a vigorous rebound, regional markets underwent a period of cooling and adjustment. This created a fascinating interplay between urban and regional areas, with some early signs of a “reverse sea change” emerging.

5.3.1 Regional Market Cooling and Resilience

After the explosive growth witnessed immediately post-pandemic (regional housing values surged 56.3% from March 2020 to early 2025) ^[3], regional markets began to temper in late 2022 and 2023.

• Moderation of Growth: Rising interest rates, which increased rapidly from 0.1% to approximately 4.1% between May 2022 and mid-2023, dampened buying capacity across the board. Regional home values fell about **2.2% overall in 2022** after their April peak ^[34].
• Coastal Hotspots Correct: Overheated coastal markets that received the bulk of the early pandemic migrants saw the most significant corrections. For example, Queensland’s Sunshine Coast and Gold Coast dipped approximately 6-7% from their peaks ^[100], ^[101]. Similarly, NSW’s Richmond-Tweed region (encompassing Byron Bay) experienced value declines of around 15% from its 2022 peak ^[35].
• Enduring Strength: Despite these corrections, regional markets demonstrated remarkable resilience. By early 2025, regional home values remained, on average, **30-50%+ pricier than pre-COVID levels** ^[128], ^[129]. This indicates that while the feverish pace of growth abated, the structural uplift in value largely endured.

5.3.2 Emergence of the “Reverse Sea Change”

A notable trend in 2023 was the anecdotal, and sometimes statistical, evidence of a “reverse sea change” – a phenomenon where some individuals, having moved to regional areas during the pandemic, opted to return to capital cities.

• Return-to-Office Pressure: The primary driver for this was the increasing demand by employers for hybrid or full-time in-person work. For those who had moved significant distances from metropolitan centres, the daily commute became untenable, leading them to reconsider city living.
• Statistical Nuances: While the number of people moving from regions to capital cities did tick up in 2023, it was still significantly outweighed by the ongoing metro-to-regional movements ^[36]. The Commonwealth Bank of Australia (CBA) and Regional Australia Institute (RAI) noted that even in late 2024, “32% more people [were] moving from big cities to regions than in the opposite direction,” with net regional inflows still **51% above pre-COVID averages** ^[37], ^[38].
• Areas Most Affected: The “reverse sea change” was most noticeable in regional locales that had experienced the steepest pandemic-era price rises, particularly those within one to two hours of major capitals in coastal Queensland and NSW. These were often areas where lifestyle migrants without strong pre-existing ties or employment in the region had settled, and where the economic realities of higher interest rates and increased cost of living began to bite.

5.3.3 A New Equilibrium

Midway through the decade, Australia’s property landscape has undeniably been permanently altered ^[129]. The market dynamics suggest a transition towards a new equilibrium:

• Sustained Regional Popularity: The desire for regional living persists. The Commonwealth Bank of Australia (CBA) and Regional Australia Institute (RAI) indicated that regional Australia continues to be a strong draw for metropolitan movers, with new hotspots emerging further afield than traditional commuter belts ^[39], ^[40]. Examples include Gympie in Queensland and East Gippsland in Victoria ^[39].
• Albury-Wodonga Example: The NSW border city of Albury, for instance, saw a remarkable **16-fold increase** in net capital-city migrants in the year to June 2025 ^[41], highlighting that while some established regional hotspots cooled, other inland centres gained momentum.
• Hybrid Future: The normalisation of flexible work arrangements ensures that a significant portion of the workforce can continue to choose regional living. However, the return of overseas migration ensures the continued vitality of capital cities. This suggests a more geographically distributed population than pre-pandemic, with regional housing markets maturing and remaining relatively strong, while major cities regain their growth momentum.

5.4 Broader Economic and Policy Implications

The scale of the urban rebound, driven by the massive influx of overseas migrants, has had wide-ranging economic and policy implications for Australia, extending beyond property markets.

5.4.1 Strain on Infrastructure and Services

The rapid population growth, especially concentrated in Sydney, Melbourne, Brisbane, and Perth, has placed immense pressure on existing urban infrastructure and public services ^[21].

• Housing Supply Shortage: The core issue remains housing supply. The record population growth in 2022-2023 collided with already constrained new housing stock, exacerbated by construction slowdowns and rising costs. This fundamental imbalance has been a primary driver of soaring prices and rents.
• Transport and Utilities: Increased populations mean greater demand for public transport, roads, water, electricity, and waste management services. Queensland, a major recipient of interstate and overseas migrants, reported that “extensive transport modelling indicates that current migration levels will add 229,000 extra daily trips on Queensland roads, public transport and active networks” ^[22]. The Queensland government has responded with a $32 billion infrastructure plan to cope with this demand ^[23].
• Social Services: Schools, healthcare facilities, and other community services also face increased demand, necessitating significant public investment and forward planning.

5.4.2 Affordability Crisis and Social Equity

The rapid rise in property values and rents, particularly in capital cities, has deepened Australia’s housing affordability crisis, impacting different segments of society disproportionately.

• Rental Affordability: The most acute impact has been on renters, especially younger individuals, students, and low-income households. Sydney’s median unit rent exceeding $600/week in 2023 highlights the severity of the situation. This can lead to increased homelessness, overcrowding, and forced relocation away from job centres.
• Homeownership Barriers: While existing homeowners have benefited from increased equity, first-home buyers face significantly higher entry points, particularly in the competitive capital city markets. The dream of homeownership becomes increasingly distant for many.
• Exacerbated Inequality: The divergence in property wealth has widened the gap between property owners and non-owners, and between those who could afford to participate in the regional boom and those struggling to find affordable housing anywhere.

5.4.3 Policy Responses and Debates

The magnitude of the migration-led urban rebound has sparked intense public and political debate regarding sustainable migration levels and housing policy.

• Housing Supply Boost: Governments at all levels are under pressure to accelerate housing construction. The Commonwealth government’s housing accord aims for 1.2 million new homes within five years, focusing on high-demand areas. State governments are fast-tracking rezoning, incentivising diverse housing types (e.g., build-to-rent), and promoting development in regional centres.
• Migration Settings: Discussions are ongoing about whether current high levels of overseas migration are sustainable given housing constraints. Policymakers are exploring how to align migration intake with infrastructure capacity and housing supply.
• Rental Market Interventions: Measures such as increased rent assistance, limitations on short-term rentals in tourist hotspots, and discussions around rent caps or freezes have emerged as potential policy responses to the rental crisis.
• Infrastructure Investment: Significant investments in transport and social infrastructure are being planned or are underway to support the larger and more distributed population.

The overarching challenge for policymakers is how to harness the economic benefits of robust migration without unduly exacerbating housing stress and compromising the liveability of Australia’s urban centres.

5.5 Case Studies: Illustrating the Urban Rebound and its Challenges

The dramatic shifts described above are best understood through specific examples of cities and regions at the forefront of these changes.

5.5.1 Melbourne: The Resilient Metropolis

Melbourne’s experience during and after the pandemic serves as a quintessential example of the “urban rebound.”

• Pandemic Lull: During 2020-2021, Melbourne, enduring some of the world’s longest lockdowns, registered a significant population decline of over 60,000 people in one year ^[24], a reversal unprecedented in its history. This led to inner-city areas becoming ghost towns, with rental vacancy rates in the CBD soaring to **10.2% by April 2021** ^[18]. Landlords were forced to offer severe discounts and incentives to attract tenants.
• Spectacular Comeback: With the reopening of international borders, Melbourne experienced its most significant annual population increase ever, adding an astounding **167,500 people in 2022-23** ^[25]. International students, skilled migrants, and returning residents flocked back.
• Market Impact: This influx rapidly absorbed the excess rental supply. Vacancy rates plummeted back to below 2% and are now amongst the lowest nationally. The rental market flipped from a renter’s dream to an acute landlord’s market. Home prices in middle-ring suburbs and city-fringe areas started rising again in 2023, after dipping in 2022. The city’s famed cultural and sports events also roared back to life, further cementing its appeal.
• Key Lesson: Melbourne’s trajectory highlights the resilience of major global cities. While susceptible to acute shocks like public health crises, their fundamental demand drivers (economic opportunities, world-class education, diverse lifestyle) ensure a strong rebound once conditions normalise. However, it also underscores the fragility of housing supply in the face of sudden population surges.

5.5.2 Sydney: The Enduring Global City

Sydney, often Australia’s most expensive property market, also demonstrated remarkable resilience and a strong urban rebound.

• Initial Outflows: While less dramatic than Melbourne, Sydney also saw a net outflow of around 5,150 people from its capital city region in 2020-21 ^[88]. Rental vacancies briefly eased, reflecting the slowdown in international arrivals and some internal migration.
• Migration Magnet: In FY 2022–23, Sydney’s population grew by **146,700 people**, with a growth rate of 2.8% ^[8], ^[9]. This was its biggest annual population gain on record, predominantly driven by overseas migration.
• Rental Crisis Epicentre: The sheer scale of this influx, combined with a persistent undersupply of housing units, rapidly led to a severe rental crisis. By late 2023, Sydney’s rental vacancy rate hit an all-time low of **1.2%** ^[11], with approximately 66% fewer rental listings than at the start of the pandemic. Rents soared, increasing by around 20% in 2022-23 alone, placing immense pressure on tenants.
• Property Market Performance: Despite high interest rates, Sydney’s dwelling values climbed about 6% in 2023 after a dip in 2022, demonstrating strong underlying demand ^[51].
• Key Lesson: Sydney exemplifies how strong underlying economic fundamentals and attractiveness to international migrants can fuel rapid property price and rent growth, even in the face of affordability concerns. The challenge is balancing economic growth with social equity in a city already grappling with high housing costs.

5.5.3 South-East Queensland: From Regional Boom to Sustained Growth

While primarily a story of interstate migration during the pandemic’s early phase, South-East Queensland (SEQ) has subsequently integrated overseas migration into its ongoing growth narrative, underpinning its sustained strong property performance.

• Interstate Magnet: SEQ was the undisputed winner of interstate migration, with the Gold Coast attracting 11% and the Sunshine Coast 6% of all metro-to-regional movers in 2021-22 ^[89]. This led to massive price surges; for instance, the Sunshine Coast median house price crossed seven figures by late 2022 ^[90], and Brisbane’s median house price surpassed $1 million by 2025 ^[127].
• Overseas Migration Augmentation: With borders reopening, Queensland also became a significant destination for overseas migrants. In the year to September 2023, over 120,579 people moved to Queensland, including 32,625 net interstate arrivals and a substantial portion from overseas ^[5]. This cumulative effect powered Queensland’s annual population growth to 2.7% in 2023, its fastest in over 15 years ^[6].
• Infrastructure Strain: The combined effect of interstate and overseas migration placed “unprecedented” strain on SEQ’s infrastructure, prompting a massive $32 billion transport plan from the state government ^[23].
• Market Outlook: Despite some cooling in regional coastal markets from their peaks, SEQ values remain significantly above pre-pandemic levels (+37% for Sunshine coast and 41.9% for Gold Coast vs. Mar 2020) ^[100], ^[101]. The sustained population growth from all sources ensures continued demand and underlies the structural re-rating of property values in the region.
• Key Lesson: SEQ showcases how a region with a strong amenity and lifestyle offering, once catalysed by internal demographic shifts, can maintain robust property market performance by also attracting a share of overseas migration. Proactive infrastructure planning is critical to manage this sustained growth.

The urban rebound, fueled by the reopening of international borders and record overseas migration in 2022-2023, has undeniably reshaped Australia’s property market. It has brought capital cities back to prominence, ignited severe rental crises, and begun to settle regional markets into a new, higher equilibrium. This dynamic period sets the stage for the continued evolution of housing demand and supply in 2026 and beyond.

The next section will delve into the persistent power of regional appeals in 2026, examining how regional housing markets are adapting to changing conditions, solidifying their new price tiers, and confronting the long-term challenges of infrastructure development and affordability.

6. Rental Market Volatility: From Glut to Crisis

The Australian rental market has been a kaleidoscope of extreme shifts since the onset of the COVID-19 pandemic, transforming from a state of unexpected oversupply in inner-city areas to an unprecedented affordability crisis across both capital cities and regional centres. This dramatic volatility, characterised by whiplash-inducing swings in vacancy rates and soaring rental prices, stands as one of the most immediate and impactful consequences of the great pandemic-era migration shifts, leaving a significant imprint on Australian property values and the socio-economic landscape in 2026. The initial stages of the pandemic saw a mass exodus from densely populated urban centres, particularly from inner-city apartments, as international borders closed and remote work became the norm. This led to a temporary “glut” in select rental markets, where vacancies spiked and landlords adjusted prices downwards to attract tenants. However, this transient period of renter-friendly conditions quickly dissipated, replaced by a severe undersupply driven by the return of international migration and a sustained, elevated demand for regional living. By late 2023 and into 2024, Australia found itself grappling with record-low vacancy rates nationwide and rental price increases that far outstripped wage growth, leading to acute affordability challenges for a significant portion of the population. This section meticulously details the journey of the Australian rental market through these turbulent years, analysing the underlying drivers of this volatility, presenting the stark data points that illustrate the crisis, and exploring the profound implications for tenants, property investors, and policymakers as the nation navigates this new, challenging equilibrium.

6.1 The Pandemic’s Initial Shock: Inner-City Glut and Regional Influx

The initial phase of the COVID-19 pandemic brought about an immediate and stark divergence in Australia’s rental market dynamics. As international borders slammed shut in early 2020 and widespread lockdowns were implemented, a significant demographic shift began. International students, who historically populate inner-city apartments in major capitals, departed en masse, and many young professionals, no longer tethered to CBD offices by daily commutes, opted for a lifestyle change in regional or coastal areas. This sudden and substantial outflow of residents from capital cities, particularly Melbourne and Sydney, created an unprecedented oversupply in their inner-city rental markets.

Melbourne, which endured some of the world’s longest lockdowns, witnessed a particularly severe decline in its inner-city rental occupancy. The city’s population dropped for the first time on record, experiencing the largest numeric loss of any Australian city, with over 60,000 people leaving in a single year ^[54]. This prompted a dramatic increase in rental vacancy rates. For instance, by April 2021, the rental vacancy rate in Melbourne’s Central Business District (CBD) soared to an astonishing 10.2%, a stark contrast to its pre-pandemic average of approximately 2% ^[34]. Such high vacancy rates meant that landlords faced intense competition and were compelled to reduce rents or offer incentives, such as weeks of free rent, to attract tenants. The situation temporarily transformed these areas into a renter’s market, a phenomenon rarely seen in Australia’s consistently tight urban rental markets.

At the same time, the “great migration” or “tree change” trend gained momentum, channeling urban evacuees towards regional and coastal destinations. Remote working arrangements, previously a niche benefit, became a widespread reality, allowing many to decouple their residence from their workplace in the CBD. This facilitated an internal migration that saw combined capital cities collectively lose over 25,000 people in 2020-21, while regional areas collectively gained approximately 70,900 residents ^[1]. The allure of more space, a relaxed pace of life, and comparatively affordable housing propelled a surge in demand in these regional centres.

This demand swiftly translated into a tightening of regional rental markets, long before the capital cities experienced a similar crunch. Areas offering lifestyle amenities, such as beaches, national parks, and vibrant country towns, became particularly sought after. Queensland’s Gold Coast and Sunshine Coast, for example, emerged as primary beneficiaries, attracting 11% and 6% of all metro-to-regional movers respectively in 2021–22 ^[10]. This influx immediately began to strain the limited housing supply in these areas, particularly in the rental sector. While capital city inner-city areas faced a glut, regional areas were initiating their journey towards a rental crisis.

The initial phase set the stage for the extreme volatility that would define the subsequent years. The temporary renter’s market in major urban centres masked a growing problem in the regions, where the pandemic-induced migration was already creating significant pressure on existing housing stock and infrastructure. This dichotomous experience laid the groundwork for the nationwide rental crisis that would emerge as migration patterns restabilized and reversed.

6.2 The Urban Rebound and Record-Low Vacancies

The temporary reprieve for tenants in capital cities was short-lived. As Australia’s international borders progressively reopened from late 2021 and into 2022, a massive influx of overseas migrants, including international students, skilled workers, and returning expatriates, began. This led to an unprecedented demographic rebound in Australia’s major cities, injecting immense pressure back into their once-oversupplied rental markets.

In calendar year 2022, Australia recorded a staggering 387,000 net international migrants, marking the highest annual influx ever documented ^[22]. This migration wave was concentrated primarily in the capital cities, which are the traditional gateways for new arrivals. By the 2022–23 financial year, capital cities collectively experienced their largest annual population growth on record, with an increase of 517,200 people, representing a 3.0% rise ^[7]. Melbourne alone saw an addition of 167,500 people, and Sydney swelled by 146,700, both achieving their biggest annual population gains in recent history ^[9].

This rapid re-urbanisation had an immediate and profound impact on rental vacancy rates in the capitals. Inner-city neighbourhoods, which had seen vacancies soar above 10% during early pandemic lockdowns, rapidly filled up. Melbourne’s inner-city areas, for example, saw their vacancy rates plummet from a 10.2% peak in April 2021 ^[34] to near 1% by late 2023, as international students, a crucial demographic for the inner-city rental market, returned en masse.

The national rental vacancy rate reflected this severe tightening across the country, hitting a critical 1.6% in 2023, considerably below the 10-year average ^[35]. Specific capital cities experienced even more acute shortages:

• Sydney: By late 2023, Sydney’s rental vacancy rate recorded an all-time low of 1.2% by late 2023, signifying an alarming two-thirds reduction in available rental properties compared to the outset of the pandemic ^[12]. This was a dramatic swing from the early pandemic, where rental listings were more abundant.
• Perth: As another example of acute shortage, Perth notably led all regions with a 63.9% rent surge, adding approximately $274/week to median rents over the period ^[39], although specific vacancy rates for Perth at critical junctures would provide further context.

This swift transition from glut to severe crunch highlighted a fundamental imbalance between the surging demand driven by overseas migration and the stagnant supply of available rental properties. The construction of new dwellings had not kept pace with population growth, exacerbated by supply chain disruptions and labour shortages during the pandemic. This created a highly competitive environment for renters, paving the way for substantial rent hikes and a full-blown affordability crisis. The urban rebound, while vital for economic recovery, inadvertently triggered one of the most challenging rental markets in Australia’s history.

6.3 Soaring Rents and the Affordability Crisis

The consequence of critically low rental vacancy rates, coupled with surging demand from rapid population growth, has been an unprecedented escalation in rental prices across Australia. This sustained and widespread increase throughout the 2020-2026 period has transmuted market tightness into a severe affordability crisis for tenants nationwide.

Since March 2020, national rents have soared by approximately 37.6% ^[13]. This represents an astonishing rate of growth, about 5.8 times faster than that observed in the five years preceding the pandemic ^[13]. This surge in rent significantly outpaces average wage growth, leading to substantial reductions in disposable income for renters and placing immense financial strain on households.

The crisis is not confined to capital cities but has reverberated across regional Australia, where rental market dynamics have been equally, if not more, volatile:

• Regional Rents: Rents in regional areas experienced an even more dramatic increase, jumping by over 40% since March 2020, compared to a mere 10% rise in the five years prior ^[14]. This highlights the intense pressure exerted by the initial city-to-region migration trend, where a surge in population was met with historically limited rental stock.
• Capital City Rents: While regional rents saw steeper increases percentage-wise, capital cities also endured substantial hikes, with rents rising by approximately 36% overall ^[15]. Sydney’s median unit rent, for instance, surpassed $600 per week in 2023, setting a new record and indicating the extreme cost burden on urban tenants.

Specific data points further illustrate the severity of these increases:

The impact of this rapid rent inflation has been particularly acute for vulnerable demographics within the rental market:

• Younger and Lower-Income Renters: These groups are disproportionately affected by rising rents, often being priced out of centrally located areas or forced to spend an unsustainably high proportion of their income on housing.
• International Students and Migrants: As mentioned, their return was a key driver of renewed demand in cities. However, many new arrivals face immediate rental stress due to intense competition and high entry costs, often struggling to secure accommodation.
• Local Workers in Regional Hotspots: In popular regional areas like Byron Bay, the influx of affluent city dwellers and luxury short-term rentals has drastically reduced the availability of affordable long-term rentals. Brad Reed, a lifelong Byron Bay resident and landscaper, was forced to move 30 km away to Ballina after his rent consumed “over three-quarters” of his income ^[51]. This exemplifies how vital service workers are being priced out of the very communities they serve.

The rental crisis is, therefore, not merely a statistical anomaly but a deeply felt socio-economic challenge impacting the daily lives and financial stability of millions of Australians. It underscores the critical need for comprehensive policy responses to address both the demand-side pressures and the chronic undersupply in the housing market.

6.4 The “Reverse Sea Change” and Market Re-equilibration

Amidst the dramatic shifts, by late 2022 and into 2023, subtle counter-currents began to emerge in Australia’s property and rental markets, leading to a period of re-equilibration. This phase was notably influenced by rising interest rates, the return-to-office mandates, and a reassessment by some who had previously made the “tree change” or “sea change.” This phenomenon became popularly known as the “reverse sea change.”

Interest rates, which began their upward trajectory from a historical low of 0.1% in May 2022, climbing to approximately 4.1% by mid-2023, significantly impacted borrowing capacities and investor sentiment. This dampened buyer activity across the board, including in regional markets that had previously boomed. Consequently, price growth in many high-flying regional areas either stalled or experienced slight reversals. CoreLogic data showed that regional home values collectively fell by about 2.2% in 2022 after reaching their peak in April of that year ^[42]. While this was a milder decline compared to some capital cities experienced in 2022, it marked a distinct shift from the rampant growth of the preceding years.

Coastal hotspots, which had witnessed some of the most exponential growth during the initial pandemic rush, were often the first to experience this cooling. For instance, the Richmond-Tweed region in NSW (encompassing Byron Bay) saw values fall by approximately 15% from its 2022 peak, and Queensland’s Sunshine Coast experienced a dip of around 6.5% ^[44]. Despite these corrections, it is crucial to note that prices in these areas remained significantly above their pre-pandemic levels; for example, Sunshine Coast home values were still about 37% higher than in March 2020, even after the dip ^[44].

A key factor contributing to this moderation in regional markets was the “reverse sea change,” where a minority of city dwellers who had relocated during the pandemic chose to return to metropolitan areas ^[27]. This trend was largely propelled by:

• Return-to-Office Mandates: As employers increasingly shifted away from fully remote work towards hybrid models or full-time office presence, the viability of living significant distances from major employment hubs diminished for some.
• Lifestyle Realities: For others, the realities of regional living – including limited amenities, employment opportunities for spouses, and social integration challenges – did not fully align with their expectations, prompting a return to urban conveniences.

While the “reverse sea change” represented a relatively smaller movement compared to the initial outmigration, it contributed to a slight increase in rental availability and a moderation of price growth in some previously overheated regional markets. Data indicated a subtle uptick in people moving *from* regions *to* capital cities in 2023, though this flow was still far outweighed by ongoing metro-to-regional movements ^[32].

However, the longer-term outlook suggests a new equilibrium rather than a full reversal. Even as some regions cooled, metropolitan areas began to show renewed growth. From January to November 2023, combined capital city home prices rose by 5.95% from their late-2022 low, contrasting with a more modest 2.43% increase in regional areas ^[20]. This shift underscores the enduring demand in cities, bolstered by the return of overseas migration. The CommBank-Regional Australia Institute (RAI) Regional Movers Index highlighted that, as of late 2024, net migration into regional Australia remained 51% above pre-COVID averages, with still 32% more people moving from big cities to regions than vice versa ^[33]. This indicates that the desire for regional living continues, albeit at a more sustainable pace and with movers increasingly exploring new, more affordable regional hotspots further afield from the traditional lifestyle enclaves, such as Gympie in Queensland or East Gippsland in Victoria ^[31].

In essence, the rental market is settling into a profoundly different landscape. The periods of extreme glut and subsequent crisis have given way to a precarious balance, where strong structural demand for housing, particularly rentals, continues to outpace supply in many areas. The ‘reverse sea change’ was not a widespread unwinding of the regional boom but rather a recalibration, affirming the long-term, distributed nature of Australia’s population growth and the persistent challenges in housing supply and affordability.

6.5 The Long-Term Impact and Policy Implications

The dramatic swings in Australia’s rental market, from initial glut to a severe and persistent crisis, have left an indelible mark on the nation’s housing landscape. By 2026, the ripple effects are manifesting as systemic challenges in housing supply, affordability, and the broader socio-economic fabric. These changes necessitate urgent and nuanced policy intervention to mitigate the ongoing crisis and ensure sustainable housing solutions for a growing and redistributed population.

The core of the long-term impact lies in the exacerbation of Australia’s chronic housing undersupply. The rapid population movements during and post-pandemic, particularly the surging return of overseas migration, utterly outpaced the construction of new dwellings. During the peak of the property boom, the number of properties listed for sale in regional Australia plummeted to 45% below pre-pandemic norms, with capital cities also experiencing a 10% drop ^[18]. This acute shortage of listings, combined with later declines in new housing approvals due to rising interest rates and construction costs, has created a formidable barrier to addressing the supply-demand imbalance.

This structural undersupply, confronting unprecedented rental demand, has led to a sustained period of rental stress that disproportionately affects vulnerable segments of society:

• Increased Inequality: The significant equity gains experienced by property owners in both capital cities and regions stand in stark contrast to the heightened financial insecurity faced by renters. This dynamic has widened the wealth gap, making homeownership an increasingly distant dream for many. The price gap between capitals and regions, traditionally a source of affordability, has narrowed significantly, meaning that popular regional alternatives are no longer the affordable havens they once were.
• Local Dispossession: In popular regional areas like Byron Bay and Queensland’s coastal towns, long-term locals and essential service workers have been gravely impacted. They are priced out of rents and property markets by wealthier transplants and the proliferation of short-term holiday rentals, leading to labour shortages in critical local industries, as staff cannot afford to live where they work.
• Youth and Low-Income Households: These groups bear the heaviest burden of the rental crisis, often forced into overcrowded living conditions, prolonged commutes, or substandard housing, severely impacting their quality of life, health, and economic participation.

Recognising the gravity of the situation, governments and industry stakeholders are beginning to implement various policy responses, though their efficacy and speed of implementation remain critical concerns:

• Supply-Side Initiatives:
  • Increased Housing Targets: The Commonwealth Government’s national housing accord aims to deliver 1.2 million new homes within five years, prioritising areas of high demand.
  • Incentivising Development: State governments, such as NSW, are fast-tracking rezoning and incentivising development in regional centres to boost housing stock. Queensland has announced a substantial $32 billion transport plan, acknowledging the strain on infrastructure due to rapid population growth and the need for new developments ^[19].
  • Build-to-Rent Schemes: There is a growing focus on encouraging institutional investment in build-to-rent developments to increase the supply of dedicated rental accommodation.
• Demand-Side and Affordability Measures:
  • Rent Assistance: Discussions are ongoing and recommendations have been made by think tanks for increases in Commonwealth Rent Assistance by at least 40% for couples to directly alleviate tenant financial stress ^[41].
  • Regulation of Short-Term Rentals: Local councils in tourist hotspots, like Byron Bay, are debating and implementing restrictions or caps on short-term holiday rentals to convert properties back into long-term rental stock, though this remains contentious.
  • Homebuyer Incentives: State governments are continuing to offer regional homebuyer grants and stamp duty concessions to support locals and first-home buyers in competing in tight markets.

The overarching challenge is that supply-side solutions, such as new subdivisions or large apartment projects, inherently have long lead times. The benefits of increased supply will lag considerably behind the immediate and acute demand driven by record population growth. In the interim, the rental market is expected to remain highly competitive and expensive.

The post-pandemic “great migration” has structurally reshaped Australia’s property landscape. The blend of sustained regional interest (with net regional inflows still 51% above pre-COVID averages in late 2024 ^[33]) and the powerful rebound of capital cities driven by massive overseas migration has created a new, complex equilibrium. Property values in popular regional areas are permanently reset, often 30-50%+ higher than pre-COVID levels ^[11], and mid-tier cities have entered new price tiers, exemplified by Brisbane’s median house price crossing $1 million for the first time ^[6]. This dynamic necessitates continuous monitoring and adaptable policy frameworks to address both the opportunities and the critical challenges posed by these monumental demographic and housing shifts. The rental market, in particular, will remain a key barometer of Australia’s housing health and equity for the foreseeable future.

The preceding analysis of how the rental market has whiplashed from glut to crisis underscores the profound and multifaceted impacts of the past few years’ demographic shifts. This volatility is not merely a transient phenomenon but a signal of structural changes in housing demand and supply that will define Australia’s property landscape for years to come. Recognizing the critical interplay between migration, housing markets, and government interventions, the next section will delve into the future outlook, exploring potential trajectories and policy imperatives for the Australian property market in 2026 and beyond.

7. Regional Market Cooling and ‘Reverse Sea Change’

The unprecedented internal migration from Australia’s major capital cities to regional and coastal areas during the early phases of the COVID-19 pandemic reshaped the nation’s property landscape instantaneously. What began as a mass exodus, with over 25,000 people departing combined capital cities in 2020–21 (Melbourne alone shedding 60,500 residents, a 1.2% drop) while regions gained approximately 70,900 individuals ^[1], ignited an explosive boom in regional housing markets. Regional housing values surged by an astonishing 56% since March 2020, significantly outpacing the 34% rise in capital city values over the same period ^[3]. This phenomenon led to dozens of regional markets experiencing double-digit annual price growth, with some highly sought-after areas, such as Byron Bay, even witnessing house prices double within a single year to reach record highs ^[4].

However, as Australia transitioned out of the acute pandemic phase and into a period of economic normalization, characterized by rising interest rates and a gradual return-to-office trend, the trajectory of regional property markets began to moderate. From late 2022 onwards, the frenetic pace of growth observed in regional areas slowed, leading to a cooling effect. This period heralded the emergence of a “reverse sea change” phenomenon, where a minority of city escapees reconsidered their regional moves and began returning to metropolitan centers. Simultaneously, the broader and sustained appeal of regional living persisted, driving demand into new, further-afield regional hotspots. This section will delve into the intricacies of this moderation, analyzing the forces at play, examining the characteristics of the “reverse sea change,” and exploring how these dynamics are collectively guiding regional property markets towards a new equilibrium in 2026.

7.1 The Regional Boom: A Pandemic-Driven Phenomenon

The initial surge in regional property values was a direct consequence of the pandemic-induced internal migration. With lockdowns, remote work mandates, and a heightened desire for space and lifestyle amenities, a significant portion of Australia’s urban population sought solace in regional Australia. Data from 2020–21 clearly illustrates this shift, with combined capital cities experiencing a net loss of 25,985 residents, a historic reversal of long-standing demographic trends ^[8]. Melbourne, in particular, saw an unprecedented -1.2% shrinkage, losing 60,500 people, while Sydney also saw an outflow of 5,150 residents ^[9].

This mass movement was largely facilitated by the widespread adoption of remote work. Many professionals, previously tethered to urban offices, found themselves able to perform their duties from anywhere with a reliable internet connection. This newfound flexibility allowed them to prioritize lifestyle, affordability, and a connection with nature over proximity to city centers. The most attractive destinations for these “tree-changers” and “sea-changers” were typically areas offering a blend of lifestyle appeal and reasonable accessibility to major cities.

The impact on property values was immediate and dramatic. CoreLogic figures indicate that combined regional housing values increased by 47.6% during the pandemic boom, spanning from mid-2020 to early 2022 ^[23]. This significantly outpaced the growth observed in capital cities during the same period. Some regional markets experienced truly exponential growth. Byron Bay, a popular coastal town in New South Wales (NSW), saw its median house price skyrocket by 90.9% year-on-year in mid-2021, briefly surpassing Sydney as the nation’s most expensive market ^[11]. Similarly, other areas like Coffs Harbour and Ballina recorded gains of 30-50% ^[23]. Even smaller regional towns were not immune, with places like Finley experiencing a 49% increase and Murrurundi a 46% rise in annual growth ^[11].

The influx of capital-rich city buyers exacerbated an already tight supply situation. By late 2022, the number of properties listed for sale in regional Australia was 45% below pre-pandemic norms ^[12], in stark contrast to a 10% drop in capital city listings. This scarcity, coupled with surging demand, created fierce competition and inflated prices. Certain high-demand country areas, such as Barossa in South Australia (SA) and Darling Downs in Queensland (QLD), saw total listings remain 60-70% lower than pre-2020 levels ^[13], effectively insulating prices even as external economic pressures began to mount.

This regional renaissance, while bringing economic stimulation and new residents, also presented significant challenges. Long-term residents in these booming areas faced being priced out of their communities. For example, in Byron Bay, locals struggled with housing costs increasing by 30-50% within one to two years ^[24]. Rental markets became incredibly tight, with affordability pressures particularly impacting low-income residents and essential service workers. This created what was often dubbed an “affordability crisis” in many regional towns, straining infrastructure and demanding increased provision of schools, healthcare, and transport services for the burgeoning populations. Policymakers and local governments were compelled to address these pressures through investment and proactive planning to support these new “boomtown” regions.

7.2 The Catalysts for Cooling: Interest Rates and Return-to-Office

The sustained boom in regional property markets began to lose momentum towards the end of 2022 and into 2023. Several key factors contributed to this cooling, fundamentally altering the market dynamics that had characterized the preceding two years.

7.2.1 Rising Interest Rates

A primary driver of this moderation was the aggressive increase in interest rates by the Reserve Bank of Australia. The official cash rate, which had been at a historic low of 0.1%, surged to approximately 4.1% between May 2022 and mid-2023. This rapid tightening of monetary policy had a profound impact on borrower capacity and housing affordability across the entire market, including regional areas. Higher interest rates directly translate to increased mortgage repayments, reducing the purchasing power of prospective buyers and making property investments less attractive. This significantly dampened buyer enthusiasm and contributed to a slowdown in price growth. CoreLogic data shows that regional home values experienced an overall decline of approximately 2.2% in 2022 after reaching their peak in April ^[30]. While this dip was milder than that experienced by capital cities in the same period, it marked a clear arrest of the previous frenetic growth.

7.2.2 The ‘Return-to-Office’ Imperative

Another significant factor contributing to the regional market adjustment was the gradual but undeniable “return-to-office” trend. As pandemic restrictions eased and businesses sought to re-establish pre-COVID work protocols, many employers began mandating hybrid work models or outright requiring staff to return to the physical workplace. For individuals who had moved to regional areas on the premise of perpetual remote work, this shift presented a challenge. Long commutes from rural or coastal locations to city offices became impractical, costly, and time-consuming.

This change in working arrangements was a key catalyst for the “reverse sea change” phenomenon. While the initial wave of city-to-region migration was substantial, a portion of these new regional residents found that the practicalities of a return-to-office model did not align with their chosen lifestyle. Factors such as access to career opportunities, childcare, schooling, or even simply the desire for more vibrant urban amenities also contributed to some individuals re-evaluating their regional moves.

7.3 The ‘Reverse Sea Change’ and Its Impact

The term “reverse sea change” emerged to describe the phenomenon of individuals who had relocated to regional areas during the pandemic deciding to return to capital cities. This trend, while not a wholesale reversal of the regional migration, represented a notable shift in market sentiment and demographic flow.

By 2023, anecdotal evidence and some preliminary data indicated a subtle increase in the number of people migrating from regions back to capital cities ^[31]. This counter-movement contributed to the cooling effect observed in some overheated regional markets. Coastal hotspots in NSW and Queensland, which had experienced the most dramatic price surges during the lockdown period, were particularly affected. For instance, the Sunshine Coast and Gold Coast experienced dips of approximately 6-7% from their peaks ^[5]. Similarly, NSW’s Richmond-Tweed region (encompassing Byron Bay) saw values fall by about 15% from its 2022 peak ^[30].

However, it is crucial to contextualize these “corrections.” Despite these declines, property values in these areas generally remained significantly elevated compared to pre-pandemic levels. For example, even after its 6.5% drop from its peak, Sunshine Coast home values were still roughly 37% higher than in March 2020 ^[10]. The Gold Coast, after a 7.4% peak-to-trough dip, maintained values approximately 41.9% above March 2020 levels ^[5]. Byron Bay, despite an easing from its peak median of around $3 million to $2.4 million in late 2023, still sat at roughly double its pre-COVID price ^[33]. This suggests that while price growth decelerated and in some cases subtly reversed, the underlying demand for regional living remained robust, and the pandemic-driven price increases had largely become a new baseline.

The “reverse sea change” was primarily driven by a combination of factors:

• Improved Urban Amenity: With cities fully reopening and cultural events, dining, and social opportunities returning, the appeal of urban living re-emerged for some.
• Workplace Flexibility Changes: As discussed, reduced flexibility in remote work arrangements compelled some to return to closer proximity to their physical workplaces.
• Cost of Living and Interest Rates: Rising interest rates impacted mortgage affordability across the board, but some regional areas also saw a disproportionate rise in local costs, reducing the perceived affordability advantage over cities.
• Social and Family Ties: For some, the temporary nature of their regional move during the pandemic gave way to a desire to be closer to established family networks, schools, and social circles in metropolitan areas.

This interplay of factors led to a more nuanced market. While metropolitan centers, buoyed by the return of international migration, regained momentum, regional markets moved towards a more stable, albeit higher, plateau.

7.4 Emerging Hotspots and a New Equilibrium

Despite the cooling in some of the most prominent regional markets and the onset of the “reverse sea change,” the overall enthusiasm for regional living has not dissipated entirely. Instead, the post-pandemic relocation trend has matured, leading to a new dynamic where movers are exploring destinations further afield, indicative of properties finding a new equilibrium rather than collapsing.

As of late 2024, net regional inflows of migrants were still 51% above pre-Covid averages ^[6], and approximately 32% more people were still moving from large cities to regional areas than in the opposite direction ^[14]. This demonstrates a sustained, albeit normalized, underlying demand for regional relocation. The difference now is that instead of concentrating heavily on the well-known coastal and commuter belt regions, migrants are increasingly looking to new areas that offer a compelling mix of affordability, lifestyle, and local amenities.

This shift has led to the emergence of “new regional hotspots” beyond the traditional commuter belts. The Regional Movers Index highlighted that in 2024–25, areas like Gympie in Queensland and East Gippsland in Victoria gained significant popularity, drawing newcomers who were seeking more affordable options and a quality lifestyle ^[15].

A particularly notable example of this trend is the twin cities of Albury-Wodonga on the NSW-Victoria border. Previously experiencing modest inflows, Albury-Wodonga saw an astonishing 16-fold increase in net capital-city migrants in the year to June 2025 ^[16]. This surge indicates that smaller, inland regional centers with good infrastructure, diverse economies, and a balance of urban amenities and rural charm are becoming increasingly attractive. The influx has energized the local economy, boosted housing demand, and led to significant government investment, such as a $7 million commitment for new community projects including parks and a manufacturing hub ^[49].

This evolution signifies that the demand for regional living is not a fleeting fad but a more ingrained shift in preferences. Remote work, while subject to hybrid policies, has permanently opened up possibilities for a significant portion of the workforce. Buyers, prompted by continued cost-of-living pressures and the desire for value, are becoming more discerning and willing to venture further from established metropolitan hubs to find it.

The market has largely found a new equilibrium where regional properties, while no longer experiencing the exponential gains of the peak pandemic period, remain strong and desirable. The property value gains from the boom have largely been retained, with regional home values, on average, still around 30% higher than pre-2020 levels as of early 2025 ^[7]. Sales volumes have settled to more typical levels, and the frantic bidding wars have subsided, allowing for a more balanced negotiation environment.

The long-term resilience of regional markets hinges on several factors:

• Diversified Local Economies: Regions with a strong and diverse economic base, not solely reliant on tourism or specific industries, are better positioned for sustained growth.
• Infrastructure Development: Ongoing investment in infrastructure, including transport, digital connectivity, and public services, is crucial to support expanded populations and maintain lifestyle quality.
• Affordability Advantage: While the price gap has narrowed, those regional areas that retain a relative affordability advantage compared to major capitals will continue to attract migrants.

The overarching outcome is a more distributed population across Australia, with significant proportions of new residents permanently integrated into regional communities. This has profound implications for housing supply, infrastructure planning, and the future economic development of regional Australia.

7.5 Implications for Housing Supply and Affordability in 2026

The regional market cooling and the subsequent emergence of a new equilibrium do not diminish the pervasive challenges related to housing supply and affordability that have been exacerbated by the Great Migration. In fact, these shifts underscore the need for persistent attention to these critical issues in 2026 and beyond.

7.5.1 Persistent Supply Shortages

During the peak of the regional boom, housing listings plummeted to record lows, falling 40-50% below normal levels in many regional areas ^[34]. This acute shortage of available housing, combined with limitations in construction capacity and rising building costs, means that supply continues to lag behind demand, even as market growth normalizes. New housing approvals have struggled to keep pace, further compounding the problem. This imbalance between supply and demand remains a fundamental driver of elevated property values and strained rental markets in many regional and metropolitan areas.

7.5.2 Enduring Rental Crisis

The rental market across Australia, both regional and metropolitan, remains in an acute crisis. Vacancy rates hover around record lows, often at approximately 1% in many locations ^[35]. As of early 2025, national rents had surged by about 37.6% since March 2020, with regional rents experiencing an even higher increase of over 40% ^[17].

The initial regional boom contributed significantly to this crisis in regional areas. Many rental properties were acquired by owner-occupiers or converted into higher-yield short-term holiday rentals, drastically shrinking the long-term rental pool ^[34]. Concurrently, the return of international migrants and students to capital cities from mid-2022 onwards rapidly refilled metropolitan rental markets. Sydney’s vacancy rate hit an all-time low of 1.18% in September 2023, representing a two-thirds reduction in available rentals since the pandemic’s onset ^[18]. Melbourne, after experiencing inner-city vacancy rates exceeding 10% in 2020 ^[19], saw them plummet back to near 1% by 2023 due to the massive influx of international students and migrants ^[19]. This dual pressure on both regional and capital city rental markets continues to exert immense pressure on tenants, particularly those on lower incomes, contributing to significant affordability challenges.

7.5.3 Resetting Affordability Baselines

The “Great Migration” has permanently recalibrated affordability baselines across the country. While the initial regional boom provided significant equity gains for property owners, aspiring buyers now face substantially higher entry points in most regional markets compared to pre-pandemic times. The traditional affordability gap between capital cities and regions has narrowed, making regional relocation for purely cost-saving reasons less impactful than before. Regional centers like Ballarat or Townsville now command median house prices that can rival or even exceed those in some outer suburbs of Sydney or Melbourne.

This new reality exacerbates social inequalities. Long-term residents in popular regional areas, such as Byron Bay and Noosa, have found themselves priced out of their communities by wealthier newcomers ^[24]. This phenomenon creates labor shortages in essential services, as local workers struggle to find affordable housing.

7.5.4 Policy Responses and Future Outlook

Recognizing these persistent challenges, both state and federal governments, alongside industry stakeholders, are implementing various policy responses.

• Increased Housing Supply: There is a concerted push to boost housing construction, with the Commonwealth’s housing accord aiming for 1.2 million new homes over five years, focusing on high-demand areas. State governments, such as NSW and Queensland, are incentivizing development and fast-tracking rezoning in regional centers and growth corridors ^[34].
• Regional Homebuyer Incentives: Various grants and stamp duty concessions are being offered to support locals and first-home buyers in competing within regional markets.
• Rental Market Interventions: Measures like increased rent assistance and potential limitations on short-term rentals in tourist hotspots are being considered to alleviate rental pressures ^[42].

However, the efficacy of these measures will take time to manifest. New housing developments, infrastructure upgrades, and affordable housing initiatives inherently involve significant lead times. In the interim, Australia’s property market will continue to navigate the ripple effects of the post-pandemic population shifts. The emergence of a new equilibrium in regional markets, characterized by normalized growth and diversified appeal, signifies a permanent alteration of Australia’s demographic and property landscape. The focus for 2026 will be on how effectively policymakers and communities can adapt to this reshaped environment, ensuring sustainable growth, equitable access to housing, and the necessary infrastructure to support a more distributed population. The fundamental lesson is clear: the baseline has been reset, and the challenges of housing supply and affordability have entered a new, more complex phase as Australia looks towards the middle of the decade.

Table 7.1: Snapshot of Regional vs. Capital City Property Market Changes (March 2020 – Early 2025)

The moderation in regional property markets and the emergence of the ‘reverse sea change’ phenomenon represent a crucial phase in the post-pandemic reshaping of Australian property values. While the frenetic boom has subsided, regional areas have largely retained the significant value increases experienced. The next section will further explore the dynamics of city recovery, particularly the profound influence of surging international migration.

8. Housing Supply, Affordability, and Policy Responses

The post-pandemic relocation trends across Australia have irrevocably reshaped its property landscape, catalyzing both unprecedented growth in regional centres and a dramatic rebalancing within capital cities. This Great Migration has, however, brought to the forefront critical structural challenges related to housing supply, affordability, and infrastructure strain. The rapid shifts in population dynamics, initially characterised by a mass exodus from major metropolitan areas to regional lifestyle towns, followed by a robust urban resurgence driven by returning overseas migrants, have created a complex tapestry of issues that governments and industries are now striving to address. Understanding these challenges – from the lag in housing supply relative to demand to compounded affordability issues for both buyers and renters, and the increased burden on existing infrastructure – is crucial for accurately forecasting the trajectory of Australian property values and the efficacy of policy interventions in 2026 and beyond. This section will delve into the intricacies of these long-term ramifications and evaluate the diverse responses being formulated to navigate this new equilibrium.

8.1. The Critical Lag in Housing Supply Relative to Demand

Australia’s housing market has historically grappled with supply-demand imbalances, but the pronounced population movements of the pandemic and immediate post-pandemic era have exacerbated this issue to an alarming degree. The problem manifests differently across regional and metropolitan areas, yet the overarching theme is a systemic inability to rapidly expand housing stock to match shifting and surging demand.

8.1.1. Regional Supply Crunch Amidst the Exodus

The initial phase of the pandemic, marked by the mass exodus to regions ^[1], saw an unprecedented demand for housing in regional and coastal areas. Combined capital cities, including Melbourne (-60,500 people, a 1.2% drop) and Sydney (-5,150 people), actually lost over 25,000 residents in 2020-21, while regional areas gained approximately 70,900 new inhabitants ^[1], ^[8]. This influx, driven by a desire for space, perceived safety, and increased flexibility for remote work, caught many regional markets unprepared.

The supply side in regional Australia was simply not equipped to handle such a rapid increase in population. As of late 2022, the number of properties listed for sale in regional Australia was a staggering 45% below pre-pandemic norms, starkly contrasting with a 10% drop in capital city listings ^[17]. In some particularly sought-after regional hotspots like Barossa, SA, and Darling Downs, QLD, total listings remained 60-70% below pre-2020 levels ^[18]. This severe constriction of available housing created fierce competition, contributing directly to the explosive price growth observed. Regional housing values surged approximately 56% since March 2020, far outpacing the 34% rise in capital city values during the same period ^[2], ^[19]. Specific examples highlight this intensity: Byron Bay’s median house price soared by 90.9% year-on-year in mid-2021, briefly becoming the nation’s priciest market before a slight moderation, yet still +24% higher than pre-COVID levels ^[4], ^[15], ^[16]. The Sunshine Coast and Gold Coast, major magnets for city-to-regional movers, also saw values remain considerably higher (37% and 41.9% above March 2020 levels, respectively) even after minor corrections ^[5], ^[6]. This sustained elevated demand against a backdrop of limited stock insulated prices, even as interest rates began to rise ^[19].

The core issue here is the inelasticity of supply in regional areas. Building new housing in these locations often faces challenges related to smaller developer capacity, zoning restrictions, availability of skilled labour and materials, and the need for significant infrastructure upgrades (roads, utilities, services) to support increased density. These factors mean that even with sustained demand, the supply response is inherently slow.

8.1.2. Metropolitan Supply Pressures Amidst the Rebound

While regional areas wrestled with the initial surge, capital cities experienced their own supply challenges, particularly following the reopening of international borders. The return of overseas migration, which saw a record 517,000 increase in capital city population in FY 2022-23 ^[7], ^[9], primarily driven by net overseas migration (NOM), reignited demand for urban property and rentals. Melbourne alone gained 167,500 people and Sydney 146,700, marking their biggest annual population gains on record ^[7], ^[8]. This rapid population rebound, following a period of minimal construction activity during the pandemic slowdown, created immense pressure on the existing housing stock.

Construction lags compounded the problem. Rising interest rates and increased construction costs in 2022-23 led to a reduction in new housing approvals, precisely when demand was soaring ^[30]. The long lead times for large-scale urban developments mean that the market cannot quickly respond to sudden population surges. This is particularly evident in the rental market, where inner-city vacancies that peaked above 10% during 2020 (e.g., Melbourne CBD) ^[10], ^[29] plummeted to near 1% by 2023 as international students and migrants returned en masse ^[11], ^[28]. This rapid shift from a tenant’s market to an intensely competitive landlord’s market underscores the fragility of existing supply mechanisms when faced with volatile demand shocks.

8.2. Compounded Affordability Issues for Buyers and Renters

The fundamental imbalance between housing supply and demand has severe implications for affordability across Australia, affecting both aspiring homeowners and current renters. The pandemic-driven migration shifts have not merely exacerbated existing affordability challenges but have fundamentally altered the landscape, making homeownership more distant for many and rental housing increasingly precarious.

8.2.1. Homeownership Challenges

The post-pandemic property boom saw national home prices climb by approximately 38% since the pandemic began ^[19]. This surge far outpaced wage growth, leading to a significant reduction in housing affordability ^[19]. While existing homeowners, particularly in regional areas and smaller cities, have seen substantial equity gains, first-time buyers face a significantly higher entry price point. The table below illustrates the dramatic increase in property values across various markets:

The traditional affordable alternative of regional living has eroded, as the price gap between capitals and regions narrowed significantly. For instance, the median house price in some regional cities now rivals or exceeds that of outer suburbs in Sydney or Melbourne, a scenario virtually unheard of pre-2020 ^[30]. This means that a move to a regional area, while still potentially offering a different lifestyle, no longer guarantees significant cost savings. The influx of wealthier city transplants has inadvertently priced out long-term local residents and low-income buyers in these popular regional spots, exacerbating local inequalities and transforming communities ^[27]. As Brad Reed, a lifelong Byron Bay resident and landscaper, highlighted, he was forced to move 30 km away to Ballina because rent consumed over three-quarters of his income ^[27].

8.2.2. Rental Crisis and Extreme Rents

The rental market has been particularly volatile and severely affected, experiencing a whipsawed trajectory from glut to crunch ^[12]. National rents soared by an astonishing 37.6% from March 2020 to early 2025, a growth rate approximately 5.8 times faster than the preceding five years ^[12], ^[24]. Regional rents jumped even faster, by over 40% ^[13], while capital city rents increased by approximately 36% ^[14]. Perth led all regions with a massive 63.9% rent surge, adding an average of $274 per week to median rents ^[25]. This rapid rent inflation is largely a direct consequence of critically low rental vacancy rates nationwide ^[26].

Australia’s rental vacancy rate hit a mere 1.6% in 2023, well below the 10-year average, indicating an extremely tight market ^[26]. Sydney’s vacancy rate plunged to a record low of 1.18% in September 2023, meaning two-thirds fewer homes were available for rent compared to the onset of COVID-19 ^[11], ^[28]. Melbourne’s inner-city vacancy, after spiking above 10% in 2020, also plummeted back to near 1% by 2023 ^[10], ^[29]. This dire situation is especially impacting younger individuals, students, and lower-income households, effectively pricing them out of certain cities or forcing them into longer commutes and precarious living situations. Service workers in popular tourist towns, who already struggled with housing previous to the boom, have faced exacerbated challenges, sometimes leading to labor shortages for local businesses ^[30].

The underlying causes are multifaceted: the surge in overseas migration that disproportionately impacts the rental market, the conversion of long-term rentals into more lucrative short-term holiday accommodations in regional hotspots, and a general undersupply of diverse housing options suitable for renters.

8.3. Increased Infrastructure Strain

The shifts in population distribution have placed enormous strain on existing public infrastructure and services, both in rapidly growing regional areas and resurgent capital cities. Planning and funding for infrastructure development are notoriously slow, creating a significant lag when faced with sudden and substantial population changes.

8.3.1. Regional Infrastructure Deficiencies

The rapid influx of new residents into regional areas exposed pre-existing infrastructure deficiencies. Many regional towns built for smaller, more stable populations found their roads, public transport, healthcare facilities, schools, and digital connectivity overwhelmed. Queensland, for example, saw its population grow by 2.7% in the year to September 2023 – its fastest growth in 15 years ^[21], partly due to 32,625 net interstate arrivals ^[22]. This rapid growth led to an unprecedented strain on roads and public transport, according to the Queensland government ^[22], ^[23]. New regional hotspots, such as Albury-Wodonga on the NSW-Victoria border, which saw a 16-fold increase in net capital-city migrants in the year to June 2025 ^[33], are also confronting these growing pains. Such towns require investment not only in roads and public transport but also in social infrastructure like hospitals, schools, and childcare facilities to cater to their expanding and often younger populations. Lifelong Byron Bay locals who were priced out also noted the failure of infrastructure to keep up with the town’s growth ^[27].

8.3.2. Metropolitan Infrastructure Overload

Correspondingly, the swift rebound of urban populations due to overseas migration has intensified pressure on metropolitan infrastructure. Australia’s overall population grew by a record 496,800 people (1.9%) in calendar year 2022, with net overseas migration accounting for roughly 387,000 of that increase ^[23], ^[34]. Much of this growth was concentrated in Sydney, Melbourne, Brisbane, and Perth ^[23]. These cities are once again grappling with overcrowded public transport, increased traffic congestion, and heightened demand for public services and amenities. Melbourne, for instance, added 167,500 people in FY 2022-23 ^[9], a figure that places immense strain on its existing infrastructure, particularly in the CBD and inner suburbs where these newcomers initially settle ^[35].

8.4. Government and Industry Policy Responses

In response to these critical structural problems, both government and industry stakeholders have begun to implement and propose a range of policy responses focused on increasing housing supply, improving affordability, and upgrading infrastructure. However, the efficacy of these measures is often constrained by long implementation timelines and the sheer scale of the challenges.

8.4.1. Housing Supply Initiatives

A central pillar of policy response is the drive to increase housing supply. Governments at federal and state levels are pursuing several strategies:

• National Housing Accord: The Commonwealth government has set an ambitious target to build 1.2 million new homes over five years, with a particular focus on areas undergoing high demand. This initiative aims to address the systemic undersupply across the nation ^[30].
• State-level Development Incentives and Rezoning: Various state governments are actively incentivising housing development. New South Wales, for example, is fast-tracking rezoning processes and incentivising development in regional centres to channel growth and provide more housing options outside the major capital ^[30]. Queensland has also announced significant housing investments in high-growth corridors, particularly in the south-east, to cater to its booming population ^[30].
• Affordable and Social Housing Programs: There is a renewed emphasis on boosting affordable and social housing stock. State and federal programs are allocating funding and resources to public housing, community housing providers, and build-to-rent developments, acknowledging that market mechanisms alone are not adequately addressing the needs of low-income households and key workers.

8.4.2. Affordability and Rental Relief Measures

Addressing the affordability crisis, especially in the rental market, requires a multi-pronged approach:

• First-Home Buyer Assistance: Several state governments have expanded or introduced regional homebuyer incentives, including grants and stamp duty concessions, to help local residents and first-time buyers compete in increasingly expensive markets ^[30].
• Rent Assistance Increases: Recognising the acute rental stress, there are ongoing calls and some government action to increase rent assistance. Think tanks have recommended substantial increases, with some suggesting a 40% bump for couples ^[31]. This offers immediate relief but doesn’t address the structural undersupply.
• Short-Term Rental Regulations: Local councils in tourist hotspots, like Byron Bay ^[27], are debating and implementing tighter regulations or caps on short-term holiday rentals (e.g., Airbnb) to encourage more properties back into the long-term rental market. This aims to alleviate supply pressures in areas where tourism severely impacts local housing availability.

8.4.3. Infrastructure Planning and Investment

To support distributed population growth, significant investment in infrastructure is essential:

8.4.3.1. Major Infrastructure Projects

• Queensland’s Major Transport Plan: The Queensland government has responded to unprecedented strain with a substantial $32 billion transport plan ^[23], focusing on upgrading roads, public transport networks, and freight infrastructure, especially across the high-growth South-East Queensland region.
• Regional Development Funding: The Australian government is committing funds to regional areas experiencing population growth. For instance, $7 million has been allocated for community projects around Albury (parks, manufacturing hubs) to support its expanding population, illustrating a targeted approach to regional development ^[36], ^[37].

8.4.3.2. Decentralization and Regional Connectivity

• Improved Digital Connectivity: Governments are continuing to invest in an upgraded National Broadband Network (NBN) and other digital infrastructure to support remote work and digital services in regional areas, making them more attractive and functional for businesses and families.
• Business and Government Relocation Incentives: Efforts are being made to encourage businesses and government agencies to decentralise, moving jobs and economic activity to major regional centres. This eases pressure on capital cities while fostering sustainable growth in regional economies.

8.5. Adjustments and Outlook for 2026

By 2026, the Australian property market will likely be operating in a new equilibrium ^[17], shaped by the enduring legacies of the post-pandemic migration. While some regional markets have seen a cooling or slight correction from their peaks ^[6], the underlying demand for regional living remains strong, with net regional inflows still 51% above pre-COVID averages in late 2024 ^[32]. Capital cities, fueled by sustained overseas migration, will continue to experience robust demand pressures.

The effectiveness of policy responses will largely determine the shape of housing affordability and supply in 2026. Supply-side solutions, such as accelerated construction and rezoning, have inherent time lags. Therefore, while ground will be gained, it is unlikely that the acute rental crisis or homeownership challenges will be fully resolved in the short term. The ongoing influx of migrants, coupled with high interest rates and construction costs, will keep upward pressure on prices and rents.

However, increased investment in regional infrastructure and targeted housing initiatives may start to yield results, facilitating a more distributed population growth that is supported by adequate services. Businesses are adapting by exploring satellite offices in regions, acknowledging the new geography of workers ^[30]. The property market in 2026 will be characterised by a dynamic tension between high demand (both regional and metropolitan) and slow-to-respond supply, making strategic policy interventions paramount for managing affordability and ensuring sustainable growth across Australia.

The reshaping of Australian property values by post-pandemic relocation trends is not merely a cyclical market movement but a structural shift. The long-term challenges of housing supply, affordability, and infrastructure strain demand sustained and coordinated efforts from all levels of government and industry. How effectively these issues are tackled will define the resilience and liveability of Australia’s communities in the years to come.

9. Frequently Asked Questions

Navigating the dynamic landscape of the Australian property market in the wake of the post-pandemic “Great Migration” presents a myriad of complex questions for homeowners, aspiring buyers, investors, and policymakers alike. The unprecedented shifts in population distribution, particularly between capital cities and regional areas, have left an indelible mark on property values, rental markets, and the fundamental dynamics of housing demand and supply. This section aims to address the most common and pressing inquiries regarding these transformative trends, providing detailed, research-backed answers that delve into future predictions, investment outlooks, and the broader implications for housing policies up to and beyond 2026. From the initial exodus to regional havens to the recent resurgence of metropolitan centers driven by overseas migration, understanding these forces is crucial for anyone seeking to comprehend the evolving Australian property narrative. We will explore the enduring legacy of the “tree-change” movement, the revitalisation of urban cores, the persistent challenges of affordability, and the strategic responses emerging from both government and industry to adapt to this new equilibrium.

The COVID-19 pandemic acted as an unforeseen catalyst, accelerating latent demographic trends and initiating new ones that have fundamentally reshaped Australia’s residential property landscape. In 2020–21, an extraordinary phenomenon occurred: combined capital cities lost over 25,000 residents, with Melbourne alone experiencing a staggering 1.2% population drop, equating to more than 60,500 people opting for a lifestyle change ^[1]. Concurrently, regional Australia absorbed approximately 70,900 new residents, underscoring a significant “city exodus” ^[2]. This seismic shift ignited a regional property boom, witnessing a remarkable 56% surge in housing values in regional areas since March 2020, dramatically outstripping the 34% growth observed in capital cities during the same period ^[3]. By 2022–2023, however, the narrative began to pivot, as the reopening of international borders ushered in a record 517,000 increase in capital city populations, primarily fuelled by booming overseas migration. Major cities like Melbourne (+167,500 people) and Sydney (+146,700 people) recorded their largest annual population gains on record ^[9], initiating a powerful urban rebound ^[6]. This cyclical movement, from urban depopulation to regional surge, and then back to urban revitalisation, has created a dynamically complex and, at times, contradictory market. As we approach 2026, the burning questions revolve around the sustainability of regional gains, the long-term impact of heightened urban demand, and the efficacy of policies designed to manage these unprecedented demographic and property market transformations.

9.1. Is the “Great Migration” to regional areas a permanent shift, or are people moving back to cities?

The “Great Migration” during the pandemic, characterised by a mass exodus from capital cities to regional and coastal areas, represents a significant and likely enduring shift in Australian demographics, though the pace has naturally moderated. While there has been a “reverse sea change” phenomenon, it constitutes a minority trend that does not negate the profound and permanent alterations to the property landscape.

During 2020-21, Australian capital cities experienced a net loss of over 25,000 people, with Melbourne recording an unprecedented 1.2% drop (-60,500 people) ^[1]. This outflow fuelled a regional property boom, with regional housing values surging approximately 56% since March 2020, far surpassing the 34% rise in capital city values ^[3]. This initial wave was driven by factors such as the rise of remote work, a desire for more space, and perceived affordability outside major urban centres. Popular regional destinations like the Gold Coast and Sunshine Coast in Queensland alone attracted 11% and 6% of all metro-to-regional movers in 2021-22, respectively, while regional Queensland garnered 37% of net capital-city outflows overall ^[13]. The outcome was a dramatic uplift in regional property prices, with some areas like Byron Bay seeing median house prices double in a year, and the Sunshine Coast remaining 37% higher than pre-pandemic levels even after some correction ^[15].

However, as interest rates began to rise and many workplaces initiated a return-to-office (RTO) strategy in late 2022 and 2023, some regional markets experienced a “cooling” phase. Coastal hotspots in NSW and QLD, which had seen explosive growth, dipped by approximately 6-7% from their peak ^[16]. This period saw a small cohort of “tree-changers” returning to urban centres, leading to discussions about a “reverse sea change” ^[18]. The reasons for returning varied, including the isolation of regional living, lack of adequate infrastructure (healthcare, education, high-speed internet), limited job opportunities for partners, or simply the re-evaluation of lifestyle against the convenience of city amenities once the pandemic restrictions eased.

Despite this counter-movement, the available data unequivocally points to a sustained, albeit normalised, regional draw. As of late 2024, net migration into regional Australia remained 51% above pre-COVID averages ^[19]. Critically, there were still “32% more people moving from big cities to regions than in the opposite direction” ^[19]. This indicates that while the frenetic pace of the initial regional boom has subsided, the underlying attractiveness of regional living and the structural changes enabling it (such as permanent hybrid work models) are here to stay. New regional hotspots, such as Gympie in Queensland and Wingecarribee in NSW, are continuously emerging beyond the traditional commuter belts ^[20], suggesting a broadening geographic scope for regional growth.

The permanency of this shift is further underpinned by the sustained high prices in many regional enclaves, which remain 30-50% pricier than pre-COVID levels ^[10]. This suggests a revaluation of these areas, implying that past growth is largely retained. The initial surge was driven by demand vastly outstripping limited supply. For instance, by late 2022, properties listed for sale in regional Australia were 45% below pre-pandemic norms ^[23], a factor that continues to support pricing despite moderate cooling.

In conclusion, while a small “reverse sea change” has occurred, the overall trend of heightened regional migration is a permanent shift. The pandemic acted as a powerful accelerant, pushing forward a decentralisation trend that might have taken decades otherwise. The key difference now is that regional markets are maturing, with more sustainable growth patterns and an expanding list of attractive locations beyond the original hotspots.

9.2. What are the long-term implications for property values in capital cities versus regional areas by 2026?

By 2026, the Australian property market will likely have settled into a new equilibrium, fundamentally reshaped by the “Great Migration” and the subsequent return of overseas migration. The long-term implications suggest continued strength in both capital cities and resilient regional areas, albeit with different primary drivers and growth profiles.

9.2.1. Capital Cities: Driven by Overseas Migration and Economic Hubs

Capital cities, after an initial period of population decline during the pandemic (e.g., Melbourne’s -60,500 people in 2020-21) ^[1], have experienced a dramatic rebound driven almost entirely by record levels of overseas migration. In FY 2022-23, capital cities recorded a population increase of 517,200 people (3.0%), the largest annual growth on record ^[8]. Cities like Melbourne (+167,500 people) and Sydney (+146,700 people) saw their biggest annual gains ever ^[9]. This influx has directly translated into renewed demand for metropolitan property and rentals.

* **Sustained Demand:** High levels of overseas migration are expected to continue supporting demand in major capitals where migrants typically first settle for employment and education opportunities. Australia’s population growth reached a record 496,800 increase in 2022, with net overseas migration contributing roughly 387,000 (78% of growth) ^[32]. This structural demand underpins capital city property values.
* **Rental Market Pressures:** The rapid increase in population, coupled with historical under-supply in housing construction, has led to intense pressure on rental markets. National rents soared 37.6% from March 2020 to early 2025 ^[26]. Sydney’s rental vacancy rate hit an all-time low of 1.2% in late 2023, representing 66% fewer rentals than at the pandemic’s start ^[5]. This extreme tightness often pushes renters into homeownership if possible, further bolstering buyer demand.
* **Economic Resilience:** Capital cities remain the primary economic engines and job markets, drawing people for career advancement. The “return-to-office” trend, even if hybrid, ensures sustained activity in CBDs and surrounding areas, supporting property values.
* **Affordability Constraints:** A key challenge will be affordability. Capital city price growth (33.6% since March 2020) ^[3] has still been significant, and combined with rising interest rates, will limit further rapid value appreciation. However, constant strong demand relative to supply is likely to keep prices firm, with moderate but steady growth in the lead-up to and during 2026.

9.2.2. Regional Areas: Maturing Markets with Enduring Appeal

Regional markets, which saw an explosive 56% surge in housing values since March 2020 ^[3], are now maturing from their pandemic-induced boom.

* **Normalised, Above-Average Inflows:** While the peak frenzy has subsided, regional inflows remain robust. Net regional flows were 51% above pre-COVID averages in late 2024 ^[19], indicating a sustained desire for regional living. This continued, elevated demand will act as a floor for property values.
* **Lasting Price Uplift:** Many popular regional enclaves remain 30-50%+ pricier than pre-COVID levels ^[10], even after some cooling. This reset of the price baseline suggests an enduring revaluation of these areas. Areas like the Sunshine Coast are 37% higher than pre-pandemic, and the Gold Coast 41.9% higher ^[15], demonstrating significant wealth accumulation that will not easily unwind.
* **Diverse Growth Drivers:** Future growth in regional areas will be more selective and driven by fundamentals: local job growth, infrastructure investment (e.g., Queensland’s $32 billion transport plan ^[32]), and sustained lifestyle appeal. Regions offering a balance of affordability, employment opportunities, and connectivity will perform best.
* **Supply Constraints:** The supply of properties for sale in regional Australia was 45% below pre-pandemic norms in late 2022 ^[23], much tighter than capital cities. This continues to support regional prices against significant downturns.
* **Affordability Re-evaluation:** The rapid price growth has eroded some of the regional affordability advantage, meaning buyers are now more discerning. This may lead to greater demand in second-tier regional areas further afield, like Albury-Wodonga which saw a 16-fold increase in net capital-city migrants to June 2025 ^[21], as cost-conscious buyers seek value.

In summary, by 2026:
* **Capital cities** will likely see continued moderate growth, supported by strong overseas migration and their roles as economic centres. Rental markets will remain extremely tight, further fuelling buyer demand.
* **Regional areas** will likely experience more stable, sustainable growth after their initial boom, with values maintained significantly above pre-pandemic levels. Growth will be concentrated in markets with strong local economic drivers and lifestyle appeal, benefiting from enduring decentralisation trends.
* **Overall**, the distinction between capital city and regional market performance might become less pronounced than during the peak boom/bust cycles, with an overall uplift in property values across Australia compared to pre-pandemic times. The long-term implication is a more distributed population and housing demand model.

9.3. How have specific states and territories benefited or been challenged by these migration trends?

The “Great Migration” has profoundly reshaped population distribution across Australian states and territories, creating distinct winners and losers, and presenting unique challenges and opportunities in the property market and broader infrastructure development.

9.3.1. Queensland: The Dominant Winner

Queensland has emerged as the unequivocal winner of interstate migration. In the year to September 2023, Queensland gained approximately 32,600 net interstate migrants, alongside over 87,900 international arrivals, contributing to more than 120,000 new residents in total ^[4]. This influx represents a 170% increase compared to pre-COVID levels (2019) and propelled the state’s annual population growth to 2.7%, its fastest in over 15 years ^[4].

* **Benefits:** The migration surge fuelled an unprecedented property boom. Brisbane’s median house price surpassed $1 million by 2025 ^[11], a significant jump from around $670,000 in 2019. Coastal areas like the Gold Coast and Sunshine Coast became prime destinations, attracting 11% and 6% of all metro-to-regional movers respectively in 2021-22 ^[13]. Their property values remain significantly (37-41.9%) above pre-pandemic levels even after slight corrections ^[15]. Regional cities like Bundaberg and Rockhampton also saw annual price growth exceeding 12% in 2023 ^[12]. This growth has stimulated the local economy, creating jobs in construction and related services.
* **Challenges:** The rapid population increase has placed immense pressure on infrastructure. The Queensland government cited an “unprecedented” strain on roads and public transport ^[34], leading to a $32 billion transport plan ^[32]. Housing affordability has diminished, and rental markets are extremely tight (regional rents jumped over 40% nationwide from March 2020) ^[27]. This has generated social concerns about pricing out long-term residents and workers.

9.3.2. New South Wales and Victoria: Initial Outflows, Strong Rebound

These two largest states, particularly their capital cities, bore the brunt of initial pandemic-induced outflows but have since experienced a powerful resurgence thanks to overseas migration.

* **Initial Challenges (2020-21):** Sydney and Melbourne saw significant population losses. Melbourne’s population decreased by 60,500 (-1.2%) in 2020-21, while Sydney lost 5,150 residents ^[14]. This led to high inner-city rental vacancies (Melbourne CBD reached 10.2% in April 2021) ^[36] and a temporary softening in property demand as residents sought lifestyle changes beyond the lockdowns.
* **Strong Rebound (2022-23 onwards):** The reopening of international borders triggered an astonishing recovery. Sydney added 146,700 people and Melbourne 167,500 in FY 2022-23, both recording their largest annual population gains ever ^[9]. This rapid influx revitalised urban property markets.
* **Benefits:** The return of international students and skilled migrants has reinvigorated urban economies, boosted the services sector, and reignited demand for metropolitan property. Capital city home prices in both states rebounded strongly in 2023 ^[24], with Sydney dwelling values climbing about 6% in 2023 ^[37].
* **Challenges:** Both Sydney and Melbourne are now grappling with severe rental crises. Sydney’s rental vacancy rate plummeted to an all-time low of 1.18% in September 2023 ^[29], resulting in significant rent increases (20% over 2022-23 in Sydney for example) ^[38]. The combination of high population growth and insufficient housing supply continues to strain affordability and infrastructure.

9.3.3. Western Australia: Quiet Beneficiary

WA, with its relatively open economy during the pandemic and strong mining sector, also emerged as a significant beneficiary of internal migration.

* **Benefits:** Perth recorded the fastest population growth among capital cities in 2022-23 (3.6%) ^[12], attracting both interstate and international migrants. This has bolstered housing demand in Perth and across regional WA, where coastal towns like Albany and Bunbury saw approximately 15% annual price rises in 2023 ^[12]. Perth also saw a remarkable 63.9% rent surge (adding ~$274/week to median rent) from March 2020 to early 2025 ^[28], indicating intense demand.
* **Challenges:** Similar to other growth areas, the rapid population increase is putting pressure on housing supply and rents, contributing to a tight housing market.

9.3.4. Other States and Territories

Smaller states and territories also experienced unique dynamics:

* **South Australia:** Adelaide saw unexpected price surges of over 25% during 2020-2022, benefiting from its relative affordability and attracting some interstate migrants.
* **Tasmania:** Hobart experienced a similar property boom, with prices rising over 25% in the early pandemic period, as lifestyle seekers discovered its unique appeal, though this market has since cooled.
* **Australian Capital Territory:** Canberra maintained a relatively stable property market, benefiting from its strong public sector employment base.
* **Northern Territory:** The NT saw more modest impacts from these broader migration trends due to its smaller population and specific economic drivers.

In essence, the migration trends have created a multi-speed property market across Australia. Queensland, with its long-standing appeal and pandemic-accelerated growth, has transformed its property landscape, albeit with significant infrastructure and affordability challenges. NSW and Victoria rebounded powerfully, reaffirming their status as global cities but facing an acute housing crises. Western Australia solidified its growth trajectory. These shifts necessitate tailored policy responses at both federal and state levels to manage housing supply, infrastructure, and social equity.

9.4. What role has remote work played, and will its future evolution continue to impact property trends?

Remote work has been undeniably one of the most pivotal catalysts behind the “Great Migration” and the reshaping of Australian property values. Its future evolution will continue to exert a profound influence, albeit with more nuanced impacts than the initial seismic shift.

9.4.1. The Initial Catalyst: Unleashing Geographic Freedom

During the height of the pandemic, widespread lockdowns and health directives forced millions of Australians into working from home. This involuntarily showcased the viability of remote work for a significant portion of the workforce, particularly those in professional, scientific, and technical services, finance, and information technology.

* **Empowering the City Exodus:** No longer tethered to a physical office in a capital city, many employees gained unparalleled geographic flexibility. This directly fuelled the mass exodus from urban centres to regional and coastal areas. Melbourne alone lost 60,500 people (a 1.2% drop) in 2020–21, while regional areas gained approximately 70,900 ^[1].
* **Driving Regional Property Booms:** Remote workers, often with higher incomes and considerable equity from city properties, flocked to lifestyle towns. They brought with them purchasing power that local markets were unprepared for. Byron Bay, for instance, saw property prices surge by 40-50% in the 12 months to early 2021 ^[42], driven partly by an influx of affluent city dwellers and celebrities ^[43]. Regional housing values overall surged 56% since March 2020 ^[3], significantly outpacing capital cities.
* **Shaping Preferences:** The experience of remote work fostered a desire for larger homes, more outdoor space, and a better work-life balance, preferences often more readily found and affordable outside dense urban environments. This directly contributed to the surge in demand for detached houses in regional centres.

9.4.2. Future Evolution: Hybrid Models and Sustained, Selective Impact

As Australia emerges from the pandemic, the future of remote work is largely coalescing around hybrid models, and this evolution will lead to continued, but more selective, impacts on property trends.

* **Hybrid Work Dominance:** A full return to the office is unlikely for many sectors. Instead, hybrid work, combining office and remote days, is becoming the norm. This means while the extreme geographic freedom of fully remote work might be curtailed for some, the ability to work from home for part of the week still empowers decisions to live further from the CBD. Commutable regional towns and outer suburban areas will remain attractive, as residents can balance a regional lifestyle with occasional office presence.
* **Sustained Regional Inflows (Beyond Pre-COVID Levels):** Even with hybrid models, the net migration flow into regional Australia was still 51% above pre-COVID averages in late 2024 ^[19]. This indicates that remote work, in its evolving forms, continues to support decentralisation. New regional hotspots are emerging further afield (e.g., Gympie, East Gippsland ^[20]), suggesting that a portion of the workforce is still seeking more distant, affordable lifestyle options, willing to undertake longer commutes less frequently.
* **Impact on Outer Suburbs and Secondary Cities:** Hybrid work strengthens the appeal of outer metropolitan suburbs and secondary cities that offer a better blend of affordability, space, and access to amenities, reducing the need for daily CBD commutes. This will support sustained property value growth in these areas.
* **”Reverse Sea Change” and Infrastructure:** The “reverse sea change” of some tree-changers back to cities ^[18] is partly a reflection of the challenges of full remote work, such as isolation, lack of amenities or services, and the re-instatement of some RTO mandates. This highlights that for remote work to truly succeed in regional areas, significant investment in local infrastructure (broadband, healthcare, schools) is crucial. Where these exist, remote work will continue to underpin property markets.
* **Commercial Property Sector:** The evolution of remote work will continue to profoundly impact the commercial property sector, with potential implications for office space demand in CBDs. This could indirectly affect residential developments nearby if office towers are repurposed.

In conclusion, remote work was the critical enabler of the “Great Migration.” While the initial shock has worn off, its legacy will be a more flexible, hybrid work environment that permanently alters where and how Australians choose to live. This will ensure continued, albeit more measured, demand for regional and outer-suburban properties, keeping property trends distributed beyond the traditional CBD-centric model. The long-term impact guarantees that properties offering amenities supportive of hybrid lifestyles – home offices, good connectivity, and community facilities – will remain highly sought after.

9.5. What policies are being implemented or considered to address rising property values and rental affordability?

The dramatic shifts in population and subsequent property market pressures have prompted various policy responses at both federal and state levels to address rising property values and the escalating rental affordability crisis. These measures broadly focus on increasing housing supply, supporting first-home buyers, and providing rental assistance.

9.5.1. Increasing Housing Supply

This is considered the cornerstone solution to long-term affordability, given that the rapid population growth has outpaced construction.

* **Commonwealth Housing Accord:** The federal government has set an ambitious target of building 1.2 million new homes over five years, starting from mid-2024. This accord involves collaboration with states and territories and includes incentives to accelerate housing construction in areas of high demand ^[44].
* **National Housing Infrastructure Facility (NHIF):** This facility provides funding for critical infrastructure that unlocks new housing supply, particularly in regional growth areas.
* **State-Level Planning Reforms:**
* **NSW:** The NSW government is incentivizing development in regional centres and fast-tracking rezoning processes to permit denser housing options ^[44]. This includes reforms to planning laws to streamline approvals and increase housing density near transport hubs and employment centres.
* **Queensland:** In response to unprecedented population growth (2.7% in 2023) ^[34], Queensland has announced major housing investments in high-growth corridors, coupled with significant infrastructure spending (e.g., the $32 billion transport plan) ^[32] to support new developments.
* **National Housing Supply and Affordability Council:** This independent body advises governments on housing supply and affordability challenges and monitors progress against housing targets.

9.5.2. Addressing Rental Affordability

With national rents soaring 37.6% since March 2020 ^[26] and vacancy rates at record lows (Sydney 1.18% in Sept 2023) ^[29], tackling the rental crisis is a top priority.

* **Increased Commonwealth Rent Assistance (CRA):** Think tanks have recommended substantial increases in CRA ^[45]. The federal government has made some increases, recognising the acute pressure on low-income renters.
* **Build-to-Rent Developments:** Governments are encouraging institutional investment in purpose-built rental housing (Built-to-Rent or BTR) to increase long-term rental stock, often offering land or tax incentives. This aims to create a more stable and professional rental sector.
* **Short-Term Rental Regulations:** In popular tourist hotspots like Byron Bay, councils have debated and sometimes implemented caps or restrictions on short-term holiday rentals (e.g., Airbnb) to free up properties for the long-term rental market ^[46]. This is a contentious issue, balancing tourist economy benefits against local housing needs.
* **Rent Freezes/Caps (Debated):** While not widely adopted, rent freezes or caps have been debated and implemented in some limited contexts by state governments during periods of extreme rental pressure; however, economists often caution against them due to potential disincentives for investment and supply.

9.5.3. Supporting Homeownership and Specific Demographics

Policies also aim to assist segments of the population struggling to enter the ownership market or access stable housing.

* **First Home Buyer Incentives:** State governments continue to offer grants, stamp duty concessions, and shared equity schemes (e.g., the Help to Buy scheme federally) to assist first-home buyers, particularly in regional areas where the goal is to level the playing field against cashed-up city buyers.
* **Regional Homebuyer Initiatives:** Specific incentives for professionals (e.g., healthcare workers, teachers) to move to and purchase homes in regional areas are being explored or implemented to address skill shortages and support decentralisation.
* **Affordable Housing Targets:** Governments are setting targets for social and affordable housing within new developments and partnering with community housing providers.

9.5.4. Data and Research for Informed Policy

There is an increasing emphasis on better data collection and analysis to understand migration patterns and market impacts more accurately, such as the Regional Movers Index (CBA/RAI) ^[19], to inform targeted policy interventions.

While these policies are comprehensive, their effectiveness is often challenged by the sheer scale of the housing shortfall, high construction costs, labour shortages, and the time lag between policy implementation and tangible outcomes. The sustained high levels of overseas migration (record 517,000 increase in capital city populations in FY22-23) mean that pressure on housing supply will remain intense, necessitating agile and robust policy responses well into 2026 and beyond.

This concludes our detailed exploration of the frequently asked questions surrounding the Great Migration’s impact on Australian property values. The insights drawn from the immediate post-pandemic period offer crucial lessons for understanding the market’s trajectory towards 2026. The next section will delve into the investment outlook, providing a forward-looking perspective on opportunities and risks for various market participants in this evolving landscape.

—
**References:**
1. blog.id.com.au. “Melbourne and Sydney populations fall while regional areas grow.” (2022) ^[1], ^[14]
2. blog.id.com.au. “Melbourne and Sydney populations fall while regional areas grow.” (2022) ^[2]
3. abc.net.au. “Charts show how Australia’s housing market has changed since COVID.” (2025) ^[3], ^[22]
4. statements.qld.gov.au. “Overseas and interstate migration contributes to 229,000 extra daily trips on Queensland roads.” (2024) ^[4], ^[12], ^[34]
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35. abc.net.au. “Charts show how Australia’s housing market has changed since COVID.” (2025) ^[35]
36. allhomes.com.au. “Rental vacancy rates back at pre-pandemic levels: Domain data.” (2022) ^[36]
37. propertyology.com.au. “2026 Property Market Outlook.” (2023) ^[37]
38. realestate.com.au. “Sydney rental vacancy rates crashes to record low.” (2024) ^[38]
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40. abc.net.au. “The regional suburbs in Australia that have recorded the largest value growth since COVID-19 hit.” (2023) ^[40]
41. realestate.com.au. “The ‘Golden Grid’: Is Byron Bay’s property market taking off again?” (2023) ^[41]
42. abc.net.au. “Byron Bay property prices push local workers out of town.” (2021) ^[42]
43. realestate.com.au. “Byron Bay replaces Sydney as priciest major market to buy Aussie house.” (2021) ^[43]
44. abc.net.au. “Charts show how Australia’s housing market has changed since COVID.” (2025) ^[44]
45. abc.net.au. “Charts show how Australia’s housing market has changed since COVID.” (2025) ^[45]
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