The Australian property landscape has experienced profound shifts since the onset of the COVID-19 pandemic. As buyers’ agents operating in Sydney’s Inner West and beyond, we have observed first-hand the evolving dynamics between regional property markets and metropolitan centres, particularly Sydney. This article examines the current state of regional property, the reversal of the sea-change and tree-change trends, the drivers behind any corrections, migration patterns, and the implications for both regional and Sydney property buyers.
The Sea-Change and Tree-Change Phenomenon: Is There a Reversal?
During the pandemic, a significant number of Australians sought lifestyle changes, moving from capital cities to regional areas in pursuit of space, affordability, and remote work opportunities. This migration fuelled extraordinary growth in regional property prices, with values in some regions rising by nearly 54% from March 2020 to March 2024, outpacing capital cities.
However, as the pandemic thankfully becomes a distant memory, there is growing evidence of a partial reversal. With the return to office-based work, improved affordability in some city markets, and renewed urban vibrancy, a segment of the population is moving back to metropolitan areas. This trend is particularly evident in Sydney, where property demand is rebounding and prices are again on an upward trajectory in some sectors.
Drivers of the Regional Market Correction
Several factors are contributing to the correction in regional property markets:
- Return to Office and Hybrid Work: As organisations recalibrate their remote work policies, many employees are required to spend more time in the office. This shift has diminished the appeal of living far from major employment centres, prompting some to return to Sydney and other capitals.
- Affordability Pressures: The rapid price growth in regional areas during the pandemic has eroded the affordability advantage that once attracted city dwellers. In many cases, regional prices now rival those of outer metropolitan suburbs, reducing the incentive for further migration.
- Interest Rate Movements: Recent interest rate cuts have improved borrowing capacity and boosted buyer confidence in capital cities, making metropolitan property more accessible and attractive.
- Lifestyle Reassessment: For some, the realities of regional living—such as limited infrastructure, healthcare, and educational facilities—have prompted a reassessment, particularly as city amenities and cultural opportunities resume normal operations.
Migration Patterns: Are People Returning to Sydney?
Statistical data confirms a notable movement of people back to Sydney post-pandemic. The COVID-19 pandemic disrupted migration patterns resulting in a declining population in the City of Sydney between 2017 – 2022. From 2021 – 22 to 2023 – 24, Sydney saw a net loss of 129,300 inhabitants. However, signs are now showing a rebound in population figures with an estimated annual growth rate of 1.23% from 2024.
The return of expatriates is also influencing the market. Many Australians who lived abroad during the pandemic are now returning, often with substantial savings and a desire to reconnect with family. This influx is particularly evident in the prime and prestige property segments, placing upward pressure on prices and reducing available stock.
Impact on the Sydney Property Market
The return migration is having a pronounced impact on Sydney’s property market:
- Renewed Demand: The increased demand from returnees, combined with ongoing population growth, is contributing to a new cycle of price growth across Sydney. National home prices have hit record highs, with Sydney’s median house price approaching $1.5 million.
- Rental Market Pressure: The influx of buyers and renters has intensified competition, especially in sought-after suburbs, leading to higher rents and reduced vacancy rates.
- Shift in Buyer Preferences: Many buyers are now prioritising proximity to employment, education, and lifestyle amenities, resulting in heightened demand for well-connected, inner-city, and inner-suburban locations.
Which Parts of Sydney Are Buyers Returning To?
Several regions within Sydney are experiencing heightened interest from returning buyers:
- Inner West: Suburbs such as Leichhardt, Rozelle, Glebe, Dulwich Hill, and Summer Hill have consistently ranked among the most popular for both first home buyers and returnees. The Inner West’s blend of lifestyle, connectivity, and community appeal continues to attract a diverse range of buyers.
- Eastern Suburbs and Prestige Markets: Areas such as Double Bay and Millers Point are seeing strong demand from expatriates and high-net-worth individuals, particularly in the $5 million-plus segment.
- Emerging Hotspots: A selection of suburbs like Bardwell Park, Eastlakes, Toongabbie and Glenmore Park are gaining attention for their relative affordability and growth prospects.
The Current Regional Property Landscape
Despite the correction, regional property markets, particularly in areas like Wollongong, the Shoalhaven and the Southern Highlands remain fundamentally robust. Values are still significantly higher than pre-pandemic levels, and lifestyle-driven demand continues, particularly among retirees, remote workers, and those seeking a change of pace. However, price growth has moderated, and some regions are experiencing a stabilisation or slight decline as the market rebalances.
Key points for property buyers considering regional property:
- Affordability Remains a Draw: While prices have risen, many regional areas still offer better value compared to Sydney’s median prices.
- Long-Term Growth Prospects: Infrastructure investment, population growth, and lifestyle factors continue to underpin demand in select regional markets.
- Localised Variations: Not all regional areas are equal; some have outperformed due to proximity to major centres, natural amenities, or strong local economies.
Who Is Buying in Regional and Sydney Markets?
- First Home Buyers: In the sub $1m market sector, many are entering the market via apartments in the Inner West and other accessible Sydney suburbs, often accepting that the traditional house is out of reach for their first purchase. Alternatively, this group is searching for houses with the same budget in regional areas.
- Expatriates and Returnees: This group is active in both prestige Sydney markets and select regional areas, often seeking family homes or lifestyle properties.
- Investors: With rental yields rising and vacancy rates tightening, investors are returning to both regional and metropolitan markets, targeting suburbs with strong growth potential.
- Baby Boomers and Downsizers: Many are selling larger family homes in metropolitan areas and relocating to regional centres for lifestyle reasons, although this trend has slowed compared to the pandemic peak.
Conclusion
The post-pandemic property market is marked by both continuity and change. While the initial rush to regional property has moderated, demand remains robust in certain areas, particularly within reach of Sydney, supported by enduring lifestyle preferences and affordability considerations. Simultaneously, Sydney itself is experiencing renewed demand as people return, driving growth in key suburbs and segments.
For property buyers, understanding these trends and working with experienced buyers’ agents is essential to making informed decisions in a dynamic market. Whether your goal is to secure a regional retreat or a Sydney residence, strategic advice and local knowledge will be critical to your success.
If you are considering your next move in the Sydney property market, contact us at Buyer’s Domain for expert guidance tailored to your needs.
