Significant issue in the real estate market

Interstate migration is a crucial determinant of housing demand, with the power to significantly impact housing prices and rents. Despite its importance, this aspect is often overlooked by analysts and researchers, akin to an elephant in the room. The movement of people from one State or Territory to another plays a pivotal role in shaping housing demand and supply. When individuals relocate, they necessitate a place to live, thus influencing housing prices and rents.

The graph illustrates that the percentage of interstate movers is notably higher in Tasmania, the ACT, and the Northern Territory. In the Northern Territory, over 11% of the population comprises interstate movers due to the presence of military bases and training facilities, attracting a significant number of defense personnel. This influx of individuals has resulted in a housing shortage and a boom in the property market.

Many analysts and economists rely on net interstate migration figures, which only provide the net increase or decrease in the population of a State or Territory. However, the total number of people arriving and leaving is what truly affects the housing market. For instance, Canberra’s net interstate migration fall in the previous year was only 1,300 people, but approximately 21,500 residents left while 20,200 people arrived. This movement constitutes over eight percent of Canberra’s population relocating in or out of the Territory.

The composition of individuals moving interstate is crucial as it impacts housing needs. In Canberra, young professionals arriving to work in the public service are driving demand for unit rentals, while older residents retiring are selling empty nests and departing. This demographic shift underscores the fluctuation in house prices in established suburbs where older individuals are leaving versus the increase in unit rents in suburbs where younger professionals are arriving.

In Tasmania, while there was only a net natural increase of 200 people in the State, approximately 15,000 individuals left for the mainland. These departures primarily consist of younger people seeking opportunities on the mainland, leaving behind empty bedrooms but not empty homes. Conversely, older individuals moving to Tasmania to retire due to lower housing prices and a milder climate create buyer demand. The impact of these arrivals and departures on housing supply and demand is not accurately captured by net interstate migration figures.

The mismatch between housing supply and demand indicates the potential for housing prices to surge in locations like Hobart, Launceston, Devonport, and Ulverstone. Understanding the dynamics of interstate migration and its implications on the housing market is crucial for investors and policymakers to anticipate market trends accurately. By delving into who is moving interstate and why, a clearer picture of housing market performance emerges, shedding light on the hidden elephant in the room that significantly affects the real estate landscape.