News release

From: Adelaide University

In a post-COVID world, CBD living is losing appeal with Australian residents opting for lower-density housing, according to new research from Adelaide University.

Published in Regional Studies, the research examined the future direction of population growth across Australia’s capital cities, regional centres and rural areas, as the pandemic reshapes where households and firms choose to locate.

Australia’s population has become increasingly concentrated in major capital cities over recent decades and many regional centres have experienced population decline. The study sought to test whether the long-standing benefits of urban agglomeration are now being outweighed by rising costs, particularly following disruptions caused by the COVID-19 pandemic.

The researchers surveyed 2970 Australian households to assess how people are weighing the trade-offs between density, cost, access to jobs and quality of life, alongside changes in firm location decisions.

“We found that major cities remain strong drawcards, but people are less willing to live in inner-city areas and are more likely to choose lower-density housing when they can,” said Professor Akshay Vij from Adelaide University’s College of Business and Law.

“Workers are being pushed towards the peripheries due to rising living and transport costs, overcrowding, pollution and health concerns. At the same time, greater access to online platforms for work, education and e-commerce has reduced the need to live close to the CBD.”

The research also shows that small, inland towns are likely to become less attractive to residents, with ongoing losses in population, employment and resources. However, the picture is more mixed for larger regional cities where those that are coastal or located close to major metropolitan areas are becoming increasingly attractive to residents who are seeking more space while maintaining access to employment and services.

“Together, these preferences are predicted to consolidate economic and population growth in and around Australia’s largest cities and nearby regional centres,” said Dr Lynette Washington from Adelaide University’s College of Business and Law.

“The combination of firms’ preference for CBD locations, workers’ preference for less densely populated neighbourhoods, and the persistence of remote work has created a post-pandemic landscape in which the boundaries of cities are expanding. Cities that can support remote work alongside CBD intensification are likely to be the ones that flourish.”

Unlike previous studies that relied heavily on historical data, this research used an experimental approach that combined household and firm decision-making, recognising that pre-pandemic trends are no longer a safe predictor of the future.

The findings challenge the expectation that increased working from home would drive widespread population growth in regional Australia. Instead, the research suggests Australia’s largest cities will continue to grow.

“Our research indicates the emergence of ‘red giant cities,’ which are large metropolitan centres that increasingly absorb surrounding regional cities,” Professor Vij said.

“This effect was already in play before the pandemic, but our findings indicate remote work will accelerate it.

“This trend is likely to be most visible in regional centres that are coastal and close to major cities, such as Gold Coast, Newcastle, Wollongong and Geelong. In contrast, small and remote inland centres, described as ‘white dwarf cities’, are likely to struggle to sustain any population and economic advantage.”

Professor Vij said the findings offer clear guidance for policymakers seeking to ease pressure on major cities by encouraging regional migration.

“The research shows policy efforts would be best spent focusing on supporting remote work arrangements, prioritising coastal regions near large metropolitan centres, and supporting diverse employment growth in these locations to build resilient and vibrant local economies with attractive amenities,” he said.

“Furthermore, small and remote inland communities are likely to require targeted assistance and intervention as they continue to lose residents and firms to major cities and coastal regions.”

The research was funded by iMOVE CRC and supported by the Australian Government’s Cooperative Research Centres programme, and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts.