The trend, of course, is not new – with big cities like Sydney losing population to internal migration for the past 10 years.
But the trend remains strong and has not slowed down or reversed, despite forecasts by some economists that there would be a movement of people back to the cities – with big businesses demanding that workers return to the office rather than work remotely.
The latest vacancy rate data for office space around Australia shows that the “return to the office” movement is not happening in a major way.
The Property Council of Australia, which represents the big end of town including major developers and owners of office buildings, is trying to put a positive spin on it, but the reality is that office vacancies overall are not improving in Australia as the work remotely trend continues to impact the top end office market.
The new Property Council report show than more offices were empty across the country in January than six months ago as the work from home trend continues to create headaches for Australia’s big-city landlords.
Australia’s office vacancy rate nudged up from 14.6% to 14.7% over the six months to January, the latest figures from the Property Council show. That’s a very small rise – but the expectation was that vacancies would be falling significantly by now, as people move back to the cities and return to the CBD office buildings.
In Sydney, home to many finance, insurance and tech workers, the vacancy rate jumped from 11.6% to 12.8%, while the number of empty floors in Melbourne remained unchanged, at a historic high of 18%.
Indeed, office vacancy rates are between 9% and 18% in seven of the eight state and territory capital cities. The highest at 18% is Melbourne which is the basket case among the nation’s economies and property markets of all kinds.
The Property Council called for “Active leadership” from the Victorian State Government to turn around the fortunes for Melbourne, which has Australia’s second largest CBD, the Property Council says.
The AFR reported that major companies last year issued mandates for their staff to return to the office, but these figures show it’s not happening in any major way – and both Melbourne and Sydney continue to have huge vacancies.
The movement of people from the biggest cities to regional areas is all about affordability and lifestyle, but enabled by technology which allows more people to work remotely – which is why office vacancies are so high.
Sydney, with a median house price around $1.2 million, has been steadily losing population and a proportion of that has been relocating to regional NSW, where the median house price is about $750,000 and plenty of regional cities and towns have houses on offer for less than $500,000.
This is a key reason why Regional NSW outperformed Sydney on price growth recently. In the past 12 months Sydney’s median prices have risen 1.9% for houses and 1.1% for units, while Regional NSW has managed 3% for both houses and units – with a number of individual regional markets doing considerably better than those averages.
Many suburbs of Wollongong have increased 7-9%, and a number of Newcastle suburbs have recorded double-digit growth in their median house prices, as have some of the Albury locations and several of the suburbs of Tamworth.
A recent analysis conducted by Hotspotting ranked the eight capital cities and six state regional markets – a total of 14 major jurisdictions – from 1 to 14 based on a series of different metrics and Regional NSW ranked 6th out of 14 for price growth prospects in 2025.
At Hotspotting, we expect 2025 to be a solid year overall in Regional NSW markets – but you need to see our Top 5 Regional NSW Hotspots report to find out which locations will perform the best and out-perform market norms – this year and beyond.
