Increasing migration from capital cities to regional areas is driving change

Internal migration trends across Australia continue to reshape our property markets, with capital city residents increasingly opting for life in regional locations. Driven by lifestyle preferences, housing affordability, and the rise of remote and hybrid work, this population shift is having a tangible impact on growth corridors, infrastructure needs, and long-term planning across the country.

According to recent research from the Real Estate Institute of Australia (REIA) and Commonwealth Bank of Australia (CBA), net migration into the regions remains elevated, with an 11% quarterly increase to March 2025 and a 20.5% rise from pre-pandemic levels. While these movements were initially spurred by lockdown-era flexibility, the momentum hasn’t slowed. Instead, we’re seeing sustained regional inflows, particularly to areas that offer strong amenity, connectivity to larger cities, and room for population growth.

Out of the cities, into the regions

Sydney and Melbourne remain the largest contributors to this trend. In the March 2025 quarter, Sydney accounted for 64% of capital city outflows, while Melbourne made up 38%. Melbourne also recorded the largest annual increase in outflows at 8%, signalling a shift in the decision-making of many city dwellers. These insights were supported by combined analysis from CBA, HTW Research, and REIA’s latest internal migration reporting.

These outflows are translating directly into growth in regional markets. Greater Geelong in Victoria has now emerged as the leading regional destination, receiving 9.3% of Australia’s total internal migration inflows. This saw it surpass Queensland’s Sunshine Coast, which had held the top spot for nine consecutive quarters. Regional Victoria also posted one of the highest total inflow increases at 6%.

In New South Wales, the appeal of Regional New South Wales continues, supported by strong inflows into local government areas like Lake Macquarie and Maitland, which saw annual increases of 65.3% and 37.1% respectively.

What this means for regional markets

The implications of these internal migration patterns are broad. Residential demand is increasing in growth corridors around key regional centres, pushing infrastructure planning, housing supply, and amenity development to the forefront. Local governments, developers, and investors are paying close attention to where the people are going and why.

Increased migration can bring economic stimulus and revitalise towns, but it also places pressure on local services, housing availability, and transport networks. Understanding these shifts at a granular level is key to anticipating future demand and ensuring sustainable growth.

Looking ahead

With affordability constraints in our capital cities and continued appetite for space and lifestyle, the trend toward regional migration shows no signs of slowing. As valuers working across every postcode in the country, our teams are on the ground each day, observing how these shifts are playing out in real time.

Whether it’s analysing the impact on housing prices, demand for new developments, or infrastructure requirements, at Herron Todd White, we help our clients make informed decisions in a changing landscape.