Australia’s two largest capital cities, Sydney and Melbourne, have been experiencing what can only be described as a mass exodus, with young people moving to regional Australia and outer suburbs in pursuit of affordable housing.
It’s becoming increasingly difficult for young people to own a home in the inner suburbs of Sydney and Melbourne, as affordability has dwindled to non-existence, with Sydney’s median house price currently sitting at just over $1.47 million.
While it’s been long suspected that homes in well-connected inner city suburbs have moved entirely out of reach for young people, KPMG has released a report that confirms this.
The same report also sheds light on the serious ramifications that could eventuate from this mass exodus and what is becoming an ageing population issue, concentrated in some sought-after but shrinking suburbs.
Inner-city suburbs are shrinking
The KPMG report highlights that inner Sydney and Melbourne suburbs are shrinking in population, driven by an exodus of mainly young people.
From 2019-2023, Marrickville’s population shrunk by 1.9 percent, or 1,064 people, 943 of whom were under 20. Leichhardt experienced an overall reduction in population by 2.7 percent, losing 2,127 of their population aged under 64, and gaining 511 residents of retirement age.
The trend continued closer to the coast, with the Eastern Suburbs (South) losing 2.4 percent of its population, or 3,448. A whopping 3,656 people aged under 64 left the area, while the suburb gained 208 residents aged over 65.
Other suburbs with declining populations include Melbourne’s Boroondara and Stonnington–West (up to -3.3%).
The report showed that most suburbs experiencing significant reductions in population were losing young to middle-aged people, aged under 64 and of ‘working age’, but gaining elderly residents, aged over 65.
On the flip side, Brisbane and Perth have experienced an influx of younger residents, with Brisbane’s inner-city (north) population growing by 8.5 percent, and Stirling in Perth growing by 7.5 percent. The bulk of this growth comes from the 20-64 age group.
Economic implications
Inner city suburbs of Sydney and Melbourne are experiencing huge shifts in their social fabrics that come with real consequences for productivity. Populations are becoming increasingly aged, and the number of working-age residents is decreasing.
KPMG Urban Economist Terry Rawnsley voiced his concerns.
"Despite being areas with exceptional access to jobs and excellent local infrastructure, inner city suburbs of Melbourne and Sydney are seeing a decline in population simply because young people can’t afford to live there,” said Rawnsley.
"It's no surprise that local businesses in some of these locations would struggle to attract customers and workers. A departure of 2.5 percent of your working-age population could feel like a recession.”
If local businesses struggle to find employees, or if they experience a demand reduction, there could be further implications on their viability, putting a damper on some of the vibrancy that makes these suburbs so desirable in the first place.
The outer suburbs are also facing strain. Declining populations in the inner city suburbs is leading to increased pressure on infrastructure in outer suburbs, which are accommodating the influx of residents.
“As workers move farther from city centres, the strain on transport and local infrastructure in suburban areas intensifies, raising implications for urban planning,” said Rawnsley.
As the population shifts outward, existing infrastructure in outer suburbs is becoming overstretched, and well-developed infrastructure closer to the CBD is becoming underutilised.
Urban planning challenges
Outer suburban areas that are relatively new tend to lack infrastructure, including transport, schools, and essential services. They’re also further away from work opportunities, which can be problematic for young people establishing careers and families.
In general, these areas are less connected than inner-city suburbs, and the existing infrastructure would likely struggle to service a sudden population surge.
"Families are increasingly moving to greenfield areas, where although residential land is more available, there are significant challenges in accessing essential services and employment opportunities,” said Rawnsley.
The cracks are starting to show
The cracks in our cities' designs are starting to show. Australia’s housing crisis has placed our city planning under scrutiny, and now experts are poking holes in their designs.
Sydney, for example, has been said to have a ‘missing middle’, where it lacks medium-density housing such as low-rise apartments, townhouses, and duplexes. Experts have blamed poor planning and zoning barriers.
The Minns government announced planning changes last year, to reduce these barriers to development, and to encourage the building of low to medium-density housing.
Paul Scully, Minister for Planning and Public Spaces, weighed in, saying, “Sydney is one of the least dense cities in the world, but fewer than half of councils allow for low-rise and mid-rise residential buildings in areas zoned for such homes.
“We’re confronting a housing crisis, so we need to change the way we plan for more housing; we can’t keep building out, we need to create capacity for more infill, with more diverse types of homes.
“Diversity of housing allows people to stay in their communities and neighbourhoods through different stages of their life,” said Scully.
Earlier this year, Minns also announced ambitions to ‘rebalance’ housing across Greater Sydney, the Illawarra, the Hunter and Central Coast, and regional NSW.
Working towards building NSW’s share of the national housing accord targets, Minns announced that 82 percent of the state's target would be built in infill areas, with 18 percent targeted to greenfield areas.
“We’re losing too many young people, people who make the city vibrant, essential workers, and young families because they can’t afford a place to live in NSW. This has to change,” said Minns.
With all of this talk from state governments, there is reason for optimism regarding future housing solutions. However, one must wonder: will these efforts come in time to make a meaningful difference?