A 2021 report by digital payment company Square showed that since 2019, transactions increased by 259% in regional areas of Australia compared to just 178% for metro regions. What does this staggering statistic mean for regional Australians and regional property post-pandemic?
Data from analytics firm McCrindle shows that areas like the Sunshine Coast, Geelong and Wollongong were growing fastest in 2019 before COVID-19. If that was an early indication of a rural appetite, then those early movers have been joined by a sea and green chasers trend across the country.
Let’s explore the opportunities and challenges facing regional small businesses in the post-lockdown economy.
The Great Metropolitan Exodus
Since working from home became the new norm for city dwellers around Australia, many have sought a better work-life balance by escaping to the countryside.
According to the ABS, between the 2020-2021 financial years, capital city residents decreased by 26,000 in total. Melbourne had the largest decline, losing 60,500 residents, while Brisbane grew by 21,000 people. Regional areas experienced unprecedented growth, with 70,000 people moving to small towns across Australia. Many of these were urbanites exiting city properties with cashed-up balance sheets. Data from CoreLogic shows how this played out in 2021, where capital city dwelling values rose by 21%, but regional values rose even more. All states experienced unprecedented gains for regional property, by more than 25% on average.
Small Business Growth in Regional Areas
The spending growth reported by Square, correlates with an increase in new small business registrations in regional areas. According to the ABS, small business registrations across Australia jumped by 15.8% over the 2020-2021 financial year. Contrary to the economic uncertainty many businesses faced across Australia due to lockdowns, Square cites the desire for freedom and wanting to be one’s own boss as the biggest motivator for new business owners, particularly in regional areas unaffected by COVID-19 restrictions.
The downsizing that occurred in many companies during the pandemic may have encouraged workers to follow a long-held dream of self-employment. Alexi Boyd, Interim Chief Executive of the Council of Small Business Organisations of Australia, said as much last year, “The move into running your own business is not as big and scary as it was a generation ago. People are no longer tied to [employers] for 30 years and recently - unemployed people are often those that can see the opportunities of running their own business.”
Buy From The Bush - A Small Business Lifeline
Facing decreased foot traffic, many small businesses in regional Australia have relied on platforms like Instagram and Etsy to sell products. Buy From the Bush, a campaign founded by Grace Brennan in October 2019 to support drought-affected rural areas, played a crucial role in supporting small businesses throughout regional Australia. The campaign focuses on supporting female small business owners, with over 97% of BFTB online stores owned by women. So far, the movement has generated over $9 million in revenue for small businesses across regional Australia.
Agriculture supports Regional Economies
Rural industries and agriculture were largely unaffected by pandemic lockdowns, allowing them to continue operating as the lifeblood of regional communities. The Goulburn region in NSW was one of the most successful, claiming an increase of 0.6% in gross regional product and a 2.3% rise in employment. As Australians move away from the city, areas such as Goldburn offer access to metropolitan districts like Canberra and Sydney and the benefits of a scenic rural location.
The Australian Government Regional Investment Corporation offers AgriStarter and Farm investment loans and reports over 2,440 loans granted since inception in 2018 for an approved value of over $3.08 billion. New industries are being added for eligibility from 1 July 2022, including turf farmers and nursery growers, with $266 million available for concessional loans next financial year.
Tourism opportunities for Regional Australia
As Australia welcomes international visitors, tourism will once again become a significant player in the regional small business market. Between the 2018 and 2019 financial years, domestic and international tourists spent $122 billion in Australia, with 44% of this cash going to regional areas. Pre-pandemic tourism in regional areas made up 4.1% of Australia’s GDP and 8.1% of the regional workforce. Data from the Australian Government indicates that although people travel for shorter periods and spend less, they are taking more frequent trips. Still, the long-term recovery of Australia’s regional tourism industry depends on an increase in international tourists.
Affordable housing an issue amid staff shortages
With the increased migration of city dwellers to regional areas comes the challenge of affordable housing. Despite regional job vacancies sitting at a record high, many who live in these towns are struggling to find affordable housing. Regional rental prices have gone up by 10% between the 2020-2021 financial year. In Port Fairy, a Victorian seaside town that saw a 200% increase in Square transactions, there has also been a 77% jump in demand for rentals, raising concerns for lower-income residents in the area who are largely casual or part-time workers.
Looking forward with renewed confidence
Ceda’s Regional Economic Outlook points to housing finance demand increasing in regional locations, including via the First Home Loan Deposit scheme. Ceda concludes that relativities for house prices are therefore a growing factor, given the median dwelling value in Australia’s capitals is $790k versus $540k for regional housing, a margin that is continuing to narrow. Indications are that demand for regional property might slow in 2022, but broad gains are expected to continue.
The easing of international and domestic travel restrictions, a consumer desire to support small businesses through increased spending and the migration of city residents to regional towns make for a bright future across rural Australia. New government incentives that support education and job skills aim to assist small business growth and encourage long-term sustainability. As the country continues its economic recovery, regional Australian small businesses will play a key role in revitalising the economy and supporting employment across the nation.
We provide services tailored to regional locations such as agribusiness finance and advice on issues such as banking, cash flow, livestock leasing and much more. Contact us with any questions you may have today.