City dwellers migrating to regional Australia have been crucial in driving Australia’s construction levels to a new high over the last 12 months, but they weren’t the only factor.

According to the latest data from the Australian Bureau of Statistics (ABS), 60,000 people departed Sydney and Melbourne to other parts of the country in the 12 months.

Citing the COVID-19 pandemic and recession as likely culprits, HIA chief economist Tim Reardon noted that “the shift in population out of Melbourne is a new trend and one that is compounded by the loss of overseas migration that has underwritten economic growth in Victoria for the past decade”.

While Sydney lost 31,600 residents to other parts of the country over the last 12 months, Mr Reardon said that “this is consistent with the trends of the past 20 years”.

On the other hand, the exodus of Melburnians “is a trend that has emerged following the COVID recession, with more than 32,000 residents departing in the year to March”, he said.

While this trend away from major cities is likely to affect local residents and rental markets, it’s been a clear boon for the construction industry.

The ABS found that there were 94.4 per cent more loans issued for construction of a new home in the last financial year than the previous.

The ABS said that this is the most loans ever issued for construction in a 12-month period.

Commenting on the figures, Mr Reardon noted that regional areas have seen “a greater increase in building approvals than capital cities as the population shifts toward lower-density areas”.

He added that federal schemes have been a significant complement to these migratory trends over the past 12 months, arguing that “HomeBuilder and other grant programs have also ensured that there were more loans issued to first home buyers in 2020-21 than in any previous financial year”.

For better or worse, this perfect storm of construction incentives and demographic shifts may be at an end.

Pointing to a fall in the issuing of loans and construction in June, Mr Reardon suggested that “the bulk of new projects initiated under HomeBuilder have passed the last regulatory hurdles”.

Speaking on the most recent ABS figures, ABS head of finance and wealth Katherine Keenan said that first home buyer lending fell across most states in June.

“The largest fall was seen in Victoria, where strength in first home buyer lending tied to construction activity continued to unwind post-HomeBuilder,” she said.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

more on this topic

Economy

Financial pressures and the 'she'll be right' attitude delay Australian divorces

In a revealing study, the Real Cost of Separation Report 2026 by Real Insurance has uncovered a trend of 'quiet uncoupling' among Australians, with financial pressures and concerns for children ...Read more

Economy

Labour market resilience provides RBA room for manoeuvre, says State Street economist

In the wake of the latest Labour Force data release, State Street, a global leader in financial services with a staggering US$54.5 trillion in assets under custody and administration and US$5.5 ...Read more

Economy

Geopolitical tensions shape investor strategies in private markets

In the face of mounting geopolitical tensions, investors are honing their strategies in private markets, as revealed by the 44th edition of the Coller Capital Global Private Capital BarometerRead more

Economy

Ellerston sees investment shift as Middle East tensions ease and inflation persists

Amid signs of easing tensions in the Middle East with US-Iran peace negotiations progressing, albeit at a slower pace than desired by markets, investors are being advised to reevaluate their ...Read more

Economy

Global markets face stagflationary pressures amid rising inflation and diverging growth

In a recent macroeconomic report, the Franklin Templeton Fixed Income team has highlighted that global markets are increasingly encountering a stagflationary environment, characterised by intensifying ...Read more

Economy

Corporate capex provides solid footing for US equities, says ClearBridge

In a promising development for the US economy, corporate capital expenditures (capex) are playing a crucial role in supporting economic growth, according to Jeff Schulze, head of economic and market ...Read more

Economy

Brands turn to household care and laundry strategies to weather cost-of-living crisis

As the UK braces for a 13% hike in its energy price cap by July 2026 and US gas prices soar to a four-year high due to geopolitical tensions, the global spotlight is once again on the cost-of-living ...Read more

Economy

GDP data prompts State Street expert analysis on cash rate and trade surprises

In light of the latest GDP figures, State Street, a global leader in financial services with a staggering US$54.5 trillion in assets under custody and/or administration and US$5.5 trillion in assets ...Read more