Millennials are fleeing suburbs where house price are rising fastest and moving to parts of Australia where real estate is cheaper.

Sydney is losing young people in suburbs where more overseas migrants are moving in.

The e61 Institute, an economic research group, said the eastern suburbs and Parramatta in particular were experiencing an exodus.

‘Housing affordability is a prime suspect. Sydney people are leaving the areas where housing prices have risen fastest,’ it said.

Millennials, covering those born from 1981 to 1996, are also more likely to leave in the years when they are having children of their own and need a house.

‘People in their thirties are leaving the fastest, the age when families grow and need more housing,’ the report said.

‘These trends may suggest that unaffordable housing is driving large-scale labour reallocation across Australia.’

Millennials are fleeing suburbs where house price are rising fastest and moving to parts of Australia where real estate is cheaper. The e61 Institute, an economic research group, said the eastern suburbs (Bondi Beach, pictured) and Parramatta in particular were experiencing an exodus

Millennials are fleeing suburbs where house price are rising fastest and moving to parts of Australia where real estate is cheaper. The e61 Institute, an economic research group, said the eastern suburbs (Bondi Beach, pictured) and Parramatta in particular were experiencing an exodus

Sydney’s median house price of $1.334million is so dear an average, full-time worker on $94,000 a year would struggle to pay off a $1million loan, owing the bank 11 times their salary with a 20 per cent mortgage deposit.

But in the eastern suburbs, Bondi prices are well above $4million, rising to $8million in harbourside Vaucluse, CoreLogic data shows. 

This puts housing beyond the reach of even a dual-income couple, with households in these beachside postcodes typically earning more than $200,000 a year, tax office figures show.

An elite professional would need to earn $377,553, to be among the top one per cent of income earners, to even afford a $2.84million house and avoid mortgage stress, where someone owes the bank six times or more of what they earn.

Those in their forties and sixties, who are more likely to own a house outright, were the next most likely to move, mainly for lifestyle reasons ‘related to sea- and tree-changing retirees’.

People leaving Sydney are more likely to move to south-east Queensland, Canberra or regional New South Wales. 

‘Most are choosing less-expensive nearby coastal areas, including the Wollongong and Newcastle regions and the Gold Coast,’ the report said.

‘Canberra is also popular; Melbourne, not so much.’

Sydney has also received a larger share of overseas immigration than any other city, with its population growing by one per cent a year.

But during the past two decades, 0.5 per cent of its population has been leaving, mainly for another part of Australia.

The e61 Institute calculated that for every extra percentage point that an area’s housing prices grew in the five years to 2016, an extra 0.2 per cent of the population left in the following five years.

Sydney has also received a larger share of overseas immigration than any other city, with its population growing by one per cent a year. But during the past two decades, 0.5 per cent of its population has been leaving, mainly for another part of Australia (pictured is Wynyard station)

Sydney has also received a larger share of overseas immigration than any other city, with its population growing by one per cent a year. But during the past two decades, 0.5 per cent of its population has been leaving, mainly for another part of Australia (pictured is Wynyard station)

Sydney has also received a larger share of overseas immigration than any other city, with its population growing by one per cent a year. But during the past two decades, 0.5 per cent of its population has been leaving, mainly for another part of Australia (pictured is Wynyard station)

As the property market peaked in May 2022, Sydney house prices were growing at an annual pace of 17 per cent.

But in September 2021, Sydney prices were growing at an annual level of 30 per cent, when interest rates were still at a record-low of 0.1 per cent.

Sydney’s median house has fallen by 2.4 per cent over the year to July, but rose by another one per cent in the month despite the Reserve Bank’s 12 rate rises since May 2022, taking the cash rate to an 11-year high of 4.1 per cent.

Treasury is expecting 400,000 people to have moved to Australia in 2022-23, with 1.5million forecast to arrive in the five years to June 2027.

The exodus from Sydney, as more overseas migrants moved in, looked set to continue. 

‘Sydney has been rapidly losing its population to other places in Australia, offset only by inward foreign migration,’ the report said.

House prices rise despite rate increases

SYDNEY: Up 1 per cent to $1,333,985

MELBOURNE: Up 0.3 per cent to $923,881

BRISBANE: Up 1.4 per cent to $819,832

ADELAIDE: Up 1.4 per cent to $722,793

PERTH: Up 1 per cent to $625,969

HOBART: Down 0.1 per cent to $696,570

DARWIN: Up 0.5 per cent to $583,913

CANBERRA: Down 0.3 per cent to $958,950

Source: CoreLogic data on median house prices for July 2023

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