There have been countless headlines over the past 12 months highlighting the trend of city dwellers choosing to live in regional areas in the wake of COVID-19.
In recently published data from Core Logic migration from Australian capital cities to regions increased 5.9%, while the number of people leaving regional Australia for the capital cities declined 3.5% in the same period – year ended March 2021. The combination of more people arriving in regional Australian and fewer people leaving for the cities has created additional demand for housing, pushing the number of homes available to buy or rent to extreme lows. As of late November 2021, the amount of for sale listings counted across regional Australia remained -36.9% below the five-year average.
Net outflows were mainly from Melbourne and Sydney, where most of the major lockdowns have occurred during the last 2 years with regional areas such as Geelong, Moorabool & Mansfield (in Victoria) and Newcastle & Wollongong in NSW seeing big inflows.
With state and federal governments having invested significantly over the years in bringing infrastructure, education and healthcare services in line with their capital city counterparts we are seeing many mid-career professionals and late-career / pre-retirees making the transition back to the regions to take advantage of the lifestyle & community benefits associated with regional Australia.
Deciding to pull the trigger on the move can initially be hard however, by understanding & formalizing your current and future goals will allow you to capitalize on the move.
Increasing Personal Cashflow
‘Downsizing’ the value of your home can provide you with the ability to reduce your mortgage and allow you to enjoy your hard-earned money and diversify your asset base outside of your family home – ensuring that your loan is appropriately structured to allow for this can ensure that no unnecessary break costs are incurred and/or any refinance reflects your new financial position.
Investing ‘The Difference’
Taking advantage of any price differential associated with a relocation can allow you to build assets outside of the family home & superannuation. Establishing an investment strategy for any excess capital has the benefits of diversifying the family balance sheet and potentially providing an additional income stream for the household budget. An investment strategy is a scalable approach to building wealth in your own name in that you can flexibly add/withdraw funds at varying points in time depending on your cashflow/expenditure requirements.
Building Your Retirement Assets
Harnessing the power of superannuation as a highly tax effective wealth accumulation tool can provide you with the spring board to funding your retirement goals. With ever-changing contribution rules developing a tailored contribution strategy is vital to taking advantage of the tax concessions.
For pre-retiree / retiree clients that meet certain eligibility criteria a ‘downsizer’ event may present the opportunity to take advantage of the government legislation that permits the adding of funds into superannuation outside of the normal rules.
These are just some of the general opportunities that present itself for people that are considering a lifestyle change. As always we encourage you to seek professional advice in order to understand the complexities and intricacies involved with a move and how they apply to your personal circumstances.
If you have any questions about the above, please contact Prosperity Financial Adviser Phillip Bures on pbures@prosperity.com.au to discuss.
References
Migration from Australian cities to regional areas growing | The Canberra Times | Canberra, ACT
Property prices flying towards $800,000 mark | Newcastle Herald
Regional housing market doubles capital city value growth | CoreLogic
Where has affordability deteriorated the most in the regions? | CoreLogic
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please contact us if you want more information. Prosperity Wealth Advisers Pty Ltd (ABN 32 141 396 376), Authorised Representative and Credit Representative of Hillross Financial Services Ltd, Australian Financial Services Licensee and Australian Credit Licensee 232 706.
