Queensland residential: Is affordability driving migration?November 15, 2018 / By
Queensland has recently regained its title as the leading destination for interstate migration within Australia. After holding this position for decades, Victoria temporarily took the title for several years since the end of the mining investment boom as Queensland’s migration slowed sharply. However, net interstate migration to Queensland has increased by over 50% per annum since 2015 and is running at 24,004 people over the year to Mar-18 (more than double the average of the last decade). So, what is pulling people northward once more?
The Queensland economy has now rebounded to strong and broad-based growth. This follows a slip into recessionary conditions from around 2012 onwards, as the mining investment boom ended and workers left the state. The recent recovery in growth has brought with it much stronger jobs growth, which is usually a pre-requisite to facilitate stronger migration. Total employment for Queensland grew by 2.0% over the year to August 2018, translating to an increase of over 48,000 jobs in the state. Importantly to lure people to the state, this was driven by full-time jobs growth, with total part-time jobs falling slightly over the year. Sectors contributing most strongly to growth include the manufacturing sector (up 22% yoy), a rebound in mining jobs (17.3%), the public sector (19.6%), wholesale trade (24.4%), while education and health have been key growth sectors for several years now. Increased infrastructure spending has been another important factor in the rebound, providing a direct boost the economy and drawing both white collar and construction workers back into the state.
Nevertheless, it is likely to be much more than just job opportunities driving increased migration. Another crucial factor driving strong migration to Queensland, is undoubtedly housing affordability pressures in Sydney and Melbourne. The ratio of Brisbane house prices as a proportion of Sydney’s house prices has a high correlation with interstate migration movements. When the market is at its most unaffordable, interstate migration out of NSW and into QLD increases significantly. Brisbane house prices are currently sitting at just over half the level of Sydney prices, which is levels not seen since just after Sydney’s post-Olympics price boom in the early-2000s. Gross migration to QLD from NSW has been particularly strong over the year to March 2018, with 52,000 people entering Queensland from NSW.
Strong house price growth in Sydney and Melbourne over recent years means many homeowners have had enormous equity growth. They are now in a strong position to capitalise on Queensland’s lower housing prices, capture SE Queensland’s lifestyle attributes and reduce overall debt levels. As Sydney and Melbourne’s housing markets and economies continue to slow, we expect Southeast Queensland’s improving economic prospects and more affordable housing to remain a very attractive lure. Across the medium-term, this creates a platform for the region’s housing market to regain momentum and possibly lead the nation back into price growth in the next cycle.
Figure 1: Correlation between interstate migration & housing affordability
Source : ABS and JLL Research
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