What’s driving Sydney’s population exodus?

The 2015-16 release of “Regional Internal Migration Estimates” hardly makes a ripple each year when released by the ABS. But this year’s release tells a powerful story.

Housing affordability

There is a lot of talk about Sydney’s housing prices, and how it’s now too expensive to live in Sydney. Certainly, even to someone from Melbourne (where the housing prices are ridiculous), Sydney’s look absolutely crazy. Check out any of our local economic profiles for the Sydney area to see this e.g. Sutherland Shire.

The entry level price for a unit in Greater Sydney (first quartile – what a first home owner might be looking at getting a foot in the market, probably a 1 bedroom flat) is $547,000 in 2016. For a house, it’s $670,000. This will be a very basic form of housing, probably some distance from the city. So, housing is generally quite unaffordable in Sydney for a large segment of the population.

Population trends

The regional migration numbers for 2015/16 show that housing affordability may be having an impact on the population.

Typically, Sydney gains population from overseas and loses population to other parts of Australia – it’s often the first port of call for migrants, that’s nothing new.

But this seems to be accelerating. The 2015/16 figures show a net loss of 23,176 people from Greater Sydney to other parts of Australia. It is by far the biggest internal migration loss of any Australian region. As I said this is nothing new. But the average over the past 10 years has been a loss of 19,000 from Greater Sydney, and this trend is accelerating in the past few years.

Source: ABS.Stat – Regional Internal Migration Estimates

While I’ve drawn the link to housing prices here, it’s not possible to get the “why” from these figures, but the fact that it’s increased lately in line with massive increases in housing costs is a strong indication of a link.

So who gains from Sydney’s loss?

The internal migration chart shows that it’s partly Melbourne (gained about 2,400 people from Greater Sydney in net terms) but mostly regional NSW.

The part of NSW outside Sydney had a net gain of just under 12,000 in net terms for 2015/16. But this is actually made up of a net gain of 15,040 from Sydney to Regional NSW, and a loss of about 3,000 from Regional NSW to other areas. So Regional NSW is gaining about 15,000 people a year from Sydney. This makes up a lot of their population growth.

This trend represents an opportunity for many regional NSW centres to promote their areas to residents of Sydney wanting to leave. Many people can’t afford to stay in Sydney and are seeking to move to regional NSW, but all places aren’t created equal. This chart shows the movement from Sydney to the regions in net terms in 2015/16.

We can see that the strongest migration from Sydney is to nearby coastal areas, with the largest migration being into the Hunter Valley, Newcastle, Illawarra and Mid-North Coast. So a lot of coastal migration, some of which will be retirement related. The Southern Highlands and Canberra Region also take a large share. But all regions are represented, including inland areas such as Central West. The only strong negative is from the Far West, where there is still a net movement into Sydney.

The EVOCities program is one program which looks to attract people from Sydney to regional NSW, and has had some success with the larger regional centres. Looking at a population growth map of NSW over the past 5 years, though, it’s apparent that many of the smaller councils are still losing population. Most of the migration from Sydney is to the larger regional centres, which also attract population (“sponge cities”) from the surrounding area.

Community profiles

.id’s community profiles let you see for your area, where people are moving to and from, and their ages. This helps councils target their campaigns for attracting people, and in terms of economic development helps councils understand why people may be leaving.

.id is a team of population experts who combine online tools and consulting services to help local governments and organisations decide where and when to locate their facilities and services, to meet the needs of changing populations. Access our local government area information tools here.