A COVID-induced mass exodus to the regions? Not really…

We’ve all been reading about the supposed ‘mass migration’ from Australian cities to the regions over the COVID-19 period, but how real is it actually? And do the statistics back the anecdotal evidence?

It turns out, the tale of an exodus to the country, painting mental pictures of deserted inner-city precincts and apartment buildings simply isn’t true.

In fact, Perth, along with Brisbane and Darwin, all had net population gains in the September 2020 quarter, according to Australian Bureau of Statistics (ABS) data released in February.

This isn’t to say there’s no truth to the rumour – the ABS confirmed that internal migration resulted in a net loss of 11,200 people from Australia’s capital cities in the same quarter – the largest net loss of people from our capitals on record.

It’s actually not unusual for us Aussies, we have one of the most internally mobile populations in the world – about 40 per cent of our population changes addresses at least once within a five-year period.

Data released last month by Urbis confirmed that not only did Perth have ample stock of unsold apartments but also that we currently have the lowest proportion of property investors of all capitals. The connection between these two facts cannot be underestimated.

Urbis Director David Cresp said while there was not an oversupply of apartments in the Perth market, and there had been strong sales activity in the last quarter of 2020, a survey of Perth buildings with 25-plus apartments completed in recent years showed 1615 dwellings still for sale – all at a time when the local rental market is experiencing record-low vacancy rates.

The data showed that Perth has gone from 48 per cent of apartments being purchased by investors in 2016 down to 28 per cent in 2020, whereas percentages still hover around 50 per cent in Melbourne, Sydney and Brisbane.

Urban Development Institute of Australia (UDIA) WA CEO Tanya Steinbeck rightly blames the fall in apartment sales (down 61 per cent in 2020 compared to a peak in 2014) on the fall in property investor numbers over the past five years, with investor finance falling 75 per cent in this time.

This is why UDIA WA last month launched a campaign calling for the state to “release the pressure valve” on the rental market by incentivising investment in apartments. Investors will provide rental product into the market, which is currently desperately needed amid Western Australia’s rental crisis.

Affordability isn’t the issue. WA apartments are currently the cheapest in Australia, selling 11 per cent below the price in Adelaide. And in areas where there was a critical rental shortage, the average price of an apartment is only 73 per cent of the median house price within those suburbs.

This week, Westpac Chief Economist Bill Evans said investors, who typically preferred apartments, had yet to return to the Perth property market in large numbers.

“Once they start coming back into the market, you’ll see the gap between houses and apartments that’s opened up start to narrow, and a shortage of apartments will emerge,” he said.

What the apartment market needs now is investors – the lifeblood of any property market. Our government would do well to heed the repeated calls by industry for government incentives to lure investors back.