In this series, our local government forecasting team are looking at the impacts of COVID-19 on different ‘types’ of places in Australia.  Today Chris Jones looks at the Inner City and CBD areas. This analysis accompanies the detailed impact assessment page that has been added to population forecasts for each of the Inner City and CBD areas listed in the table below.

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How will COVID-19 impact future population growth in our Inner City and CBD areas? In this latest blog in our series we take a closer look using our COVID-19 impact assessment page. While our last blog looked at impacts on rural areas, the impacts on Inner City and CBD areas (which lie in the centre of our largest cities and are centres of gravity for state economies, government and culture) will be felt much differently.

It’s hard not to miss all the recent media on how ‘living in capital cities will soon become a thing of the past’, and how ‘the pandemic is changing people’s attitudes towards how they want to work, and how all of this will mean that everyone is going to be able to move to the country and work from home ’. 

However, not only is it speculated that people will leave the cities, but with International borders being shut to all but a trickle of returning Australians, one of the principle drivers of population growth in our CBDs and Inner Cities, international migration, will be stopped. By some estimates, there could be 300,000 fewer international students in Australia by July 2021, the bulk of whom would have lived in or near the nation’s CBDs. 

So are our inner cities going to be hollowed out? Let’s look at the data.

What do we mean by Inner City and CBD areas?

The Inner City and CBD areas form the central core and immediate surrounds of the largest cities in Australia. They contain significant economic, government and cultural buildings and activities, and are characterised by high rise flats and apartment blocks, often populated by international students and younger professionals. 

We have identified six local government areas in Australia that can be classified as a Central Business District (CBD) areas and five local government areas that can be classified as Inner City areas. Although the COVID-19 Impact Assessment page treats these two typologies separately, in this blog we are going to consider them together. 

Typical characteristics of CBD & Inner City areas are:

• local government areas that contain or are immediately adjacent to a Central Business District (CBD), providing a range of capital city functions, including civic, cultural and sporting facilities
• are central to a wider metropolitan region and are a significant driver of state and national economic activity
• provide a range of high-order commercial services to residents across the city and state, as well as to national and international markets
• contain housing which is predominantly high density, including student accommodation and social housing, with some medium density housing in surrounding areas
• residential development opportunity which is limited to commercial conversions or brownfield opportunities
• in Inner CIty areas the detached housing is predominantly pre-war, many with heritage values
• attract large numbers of overseas migrants, including significant numbers of international students
• relatively high number of households are rented (private and social housing)
• attracts large numbers of young adult residents drawn by proximity to education, entertainment and employment opportunities
• contain one or more large universities with a high share of residents attending university
• housing is generally more expensive compared to other metropolitan areas.

The Local Government Areas (LGA’s) highlighted orange below subscribe to our population forecasts. Click the link in the table to view the forecast and COVID-19 impact assessment for that LGA.

CBD and Inner City Local Government Areas (LGA), Australia

Local Government Area (LGA)	State	Classification	Estimated Resident Population 2019 (Rounded)
City of Adelaide	South Australia	CBD	25,456
City of Parramatta	New South Wales	CBD	257,197
City of Perth	Western Australia	CBD	28,832
City of Port Phillip	Victoria	Inner City	115, 601
City of Subiaco	Western Australia	Inner City	17,251
City of Sydney	New South Wales	CBD	246,343
City of Yarra	Victoria	Inner City	101,495
North Sydney Council	New South Wales	CBD	75,021
City of Melbourne	Victoria	CBD	178,955
City of Vincent	Western Australia	Inner City	36,561
City of Fremantle	Western Australia	Inner City	31,084

 

What about Brisbane? Unlike other CBDs and Inner City LGAs, Brisbane City Council covers the entire metropolitan Brisbane area, and therefore also has other typologies contained within it. Nevertheless, we would expect that the central Brisbane area will be impacted in a similar fashion to other CBDs.

Over the past six months we have had the opportunity to present our thinking on COVID-19 impacts to a number of CBD and Inner City councils. I’ve chosen to use the City of Port Phillip’s COVID-19 impact assessment page to highlight both the population growth opportunities, as well as the challenges, that COVID-19 is creating for similar types of places.

How will COVID-19 likely impact CBD and Inner City areas’ future populations?

CBD and Inner City LGAs have experienced multi-generational shifts in population. Starting in the interwar periods, significant populations lived and worked in and close to our major city centers. Following WW2, there was an emptying out as post-war suburban areas were created, and as manufacturing and employment opportunities were redeployed away from city centres to outer suburbs. Beginning in the 1980s and 1990s, the tide turned and inner city areas were redeveloped and became attractive again to younger professionals drawn by a cosmopolitan lifestyle. Think an Australia v India test at the Adelaide Oval, or the Australian Open at Melbourne Park every summer. The City of Sydney had a Gross Regional Product of over $130 Billion in the year ending June 2019, which according to the World Bank is similar to that of Kenya or the Slovak Republic!

As the service industries, particularly around international students, became increasingly important to our economy, CBDs and Inner City areas again became crucial to our population story.  

Turning off the international migration tap is likely to have a significant impact on the population dynamic in these areas in the short term and may take time to recover. 

What are the other impacts that COVID-19 will have on CBD and Inner City areas ?

Overseas migration > negative impact 

We know that nationally, the impact on net-overseas migration (NOM) will be severe. Typically international migrants arrive in Australia and rent in the inner city areas, either due to the relatively higher availability of rental stock, or if students, due to proximity to major universities. Following this, if they remain in Australia and then form families, we often see a move to other parts of the country that has more suitable housing stock for that phase of life. 

Port Phillip has a slightly lower share of overseas born residents than Greater Melbourne (31.4% compared with 33.8%), but a higher share of overseas migration share of total net migration (2011 to 2016) at 106.8% (95.7%). [How can you get over 100% migration rates? This figure is the ratio of net inbound migration divided by the sum of net migration (intra-, inter- and overseas).]

Interstate migration > some negative impact 

Port Phillip historically experienced net interstate in migration, and although there are no border closures stopping people coming to settle in Victoria as I write, the general uncertainty around health and economic opportunity may cause potential migrants to pause. 

Intrastate migration > negative impact

CBDs and Inner Areas tend to lose a significant number of residents to other parts of their state, often seeking larger houses when establishing families. This is likely to continue as COVID-19  continues, especially as the suburbs and growth areas have more affordable housing which may be sought after for those who have lost or had to take jobs with fewer hours.

International students > significant impact 

The increase in numbers of international students has been a recent feature of CBDs and Inner City areas, and contributes to the perception of them being lively and vibrant areas, as well as contributing heavily to the local economies.  However Port Phillip, unlike most CBD and Inner City areas, does not have an oversize proportion of residents attending tertiary education when compared to Greater Melbourne (approximately 7.9%), meaning that relatively speaking, the loss of international students may not be as significant as elsewhere.

Table 1. Migration Characteristics of Port Phillip LGA

Births > some negative impact

Port Phillips’s baseline population forecasts assume a share of population increase of 7,093 due to natural increase between 2017-2021. Due to COVID-19 these numbers are likely to be fewer over this period, as fertility typically declines in times of economic and social uncertainty. 

Mortality > some exposure

Deaths caused by COVID-19 are fortunately at low levels, however, the number of deaths could increase if outbreaks were seen in areas with relatively large numbers of vulnerable elderly residents (such as seen in aged care facilities in both Melbourne and Sydney). Port Phillip has a slightly smaller share of residents aged over 70 years (and therefore some mortality exposure) compared to Greater Melbourne.

Resident vulnerability > some negative impact

Port Phillip has lower levels of resident vulnerability across all indicators compared to Melbourne. This means that we expect there will be relatively less housing relocation as a result of COVID-19. Nevertheless, the high number of private rentals (44%) and mobile younger people (18-39 year olds, 43.7%) indicate an exposure to population loss, should those people lose jobs and decide to move to cheaper accommodation. Our colleague Nenad has published a series of interactive tools to help you identify indicators of vulnerability in your community.

What’s the impact of COVID-19 on other parts of Australia?

This is the second last in our nine piece series on our assessment of the impact of COVID-19 in Australia. Look out for the last in the series, Coastal councils. Subscribe to our blog for updates as we roll out this analysis, or to our product updates to be notified when new data and features are added to our online tools.