Housing prices in parts of the Hunter have outperformed those in Greater Sydney over the past 12 months due in part to workers opting to relocate due to increasing working flexibility caused by the COVID pandemic.
The NSW Department of Planning's 2020 Population Insights report also shows prices in regional parts of the state rose by 3 per cent since April 2020, whereas in Sydney they have fallen by 3 per cent.
Despite recent falls, Sydney's median house price is still about $1million. That compares to $602,510 in Newcastle and Lake Macquarie, $477,891 for the Mid-North Coast and $452,074 in the Hunter Valley.
Like elsewhere in regional NSW, the Hunter's rental vacancies also dropped between September 2019 and September 2020.
Newcastle recorded a rental vacancy drop of about 1 per cent for the period, but region's closer to Sydney recorded a vacancy drop of more than 2 per cent.
"Vacancy rates have fallen substantially in some regional areas and the outer suburbs of Greater Sydney, suggesting that some people may be moving further from the CBD during the COVID-19 pandemic," the report says.
"This may become a long-term shift, especially if businesses can maintain flexible work arrangements.
"If flexible working remains, population growth may increase in regional areas."
In addition to an increase in people working remotely, the report suggests fewer social restrictions in regional industries combined with a strong rebound in employment growth in regional areas contributed to the migration away from Sydney to areas such as the Hunter.
"In 2019-20, the NSW economy contracted for the first time in recorded history," the report said.
"The economy is a key driver of population change in NSW.
"The full impact of COVID-19 on population change in NSW will not show up in these statistics for some time-the 2021 edition will reveal more information."
The report also shows that for the first time in 23 years fewer people left NSW for Victoria.
Fewer people also relocated to Queensland than in the 12 months prior.
"This doesn't surprise me as it's been clear that NSW has led the country in managing the health impacts of the pandemic while balancing it with the need to keep the economy buoyant," Planning Minister Rob Stokes said.
"We're more than happy to welcome people, jobs and businesses from interstate in the pandemic recovery.
Mr Stokes said it was essential that housing supply keep up with demand across the state.
"It's also important to recognise that a sudden drop in immigration doesn't necessarily correlate to a similar drop in housing demand," Mr Stokes said.
"We still need more houses to catch up with a structural shortage in housing supply, and to meet the changing housing preferences of our community, preferences that continue to change in response to the pandemic.
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