I feel confident now to say that the results are in.
At least from an Australian point of view, although it’s beginning to look similar in other markets like the United States and the United Kingdom.
Much like the ascent of Zoom and Netflix during the pandemic, this real estate trend was sold as something that would continue forever…
But it didn’t.
I’m talking about “internal migration.”
Which saw tens of thousands turn their backs on city living and migrate away to more regional areas.
Well, the results are in.
And it all turned out to be nothing but hot air.
If you bet your capital on this trend, I’m sorry to say but you were misled.
Below, I’ll explain why… and give you a better idea of where the housing market is headed next.
What’s the Net Result?
Here’s a fun fact about internal migration that almost everybody misses.
Measuring internal migration is a net result.
That is, for every person arriving at a regional area, there is one person leaving that same regional area too.
So unless you know how a regional area can create tens of thousands of new homes in a short period of time to accommodate each and every new household moving in, it can’t be any other way than this.
Established homes are almost the only option for new arrivals to either rent or buy in a regional area.
It sounded as easy as two plus two… buy a home in the suburbs and wait for this “trend” to make you a millionaire!
In fact, perhaps you did end up buying a regional investment property based solely on this trend continuing.
And on the surface, I couldn’t blame you.
You Must Develop This Edge Over the Market Yourself
We are now witnessing the gradual unwinding of COVID lockdown-era rules.
This means that right now, across the world, most of those city-dwelling workers who migrated away from cities are now being asked, even if it’s just for a day or two, to return to their work offices.
This means that for these same workers who moved to the remote suburbs to enjoy a full work-from-home lifestyle, a huge issue now is the time spent traveling to and from their new regional homes to their old city offices.
And once part-time becomes full-time back at their offices, the amount of time and money spent traveling simply becomes too high to be sustainable.
So, they will be moving back to the cities, or at least as close as they can.
Those leafy remote suburbs?
They could become the new ghost towns.
The “New Normal” Confirms the 18.6-Year Cycle
How’s that regional investment property looking now?
Among all the noise and real estate propaganda that we were bombarded with during those COVID lockdown years hid a simple truth.
If you had prior knowledge of the 18.6-year real estate cycle, you would already have been familiar with it and, most importantly, learned to trust the pattern.
Indeed, you could have made a very important decision based on it.
And here it is…
Most young people who live in these regional towns were not allowed to move to the big city due to COVID lockdowns. They stayed with parents and grandparents longer than they usually would have.
And the residents already living there couldn’t move even if they wanted to.
Thanks to a government mandate, simply add new arrivals to those who can’t move, and you get big internal migration numbers.
It was a complete fabrication.
And now, thanks to the same dynamic, those net numbers will now fall, and hard.
All those young people can now finally resume the actual trend expected at this stage of the cycle and move away.
And likely, any investment made there based on this apparent “trend” is already failing… and will continue to do so.
Believe it or not, this migration pattern between cities and regional areas happens every 20 or so years.
With the knowledge of the real estate cycle, you would have already understood this truth and seen through the noise at the time to make better investment decisions.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson