Internal migration responses to housing dynamics before and after COVID-19 in Australia

Abstract

Housing costs are a well-established constraint to internal migration. Rising costs typically reduce inflows while increasing outflows, particularly in large cities. Given the current housing affordability crisis in many countries, we extend evidence on the links between housing market dynamics and internal migration in three principal ways. First, we consider not only housing costs but also supply and distinguish between standalone and attached dwellings to provide more granular evidence. Second, we contribute a case study of Australia, where evidence is critically lacking despite remarkable housing price increases and wide regional price disparities. Third, we assess potential changes since COVID-19. To these ends, we estimate a Poisson pseudo-maximum likelihood regression with origin, destination, and year fixed effects on annual bilateral migration flows between capital cities and non-metropolitan regions from 2012 to 2023. We find that internal migrants respond to both origin and destination housing prices. Specifically, a 10 per cent increase in average prices at origin results in an 8.07 per cent increase in outflows, while a similar increase in destination prices reduces inflows by 3.96 per cent. Interregional flows also respond to an increase in housing supply at origin, albeit less so than an increase in housing price. The association between housing market dynamics and migration was greater at origin than destination before the pandemic. However, since COVID-19, migration flows have become more responsive to housing price at destination, particularly in the detached housing market. These results highlight the growing role of housing market dynamics in shaping internal migration flows.