Australian regional towns booming as business lending outstrips metro demand: Westpac
Regional towns across Australia are seeing a surge in demand for lending as businesses beef-up operations to meet households leaving the cities for affordable housing and a better lifestyle.
Regional towns are fast becoming Australia’s business hotspots as affordable housing and lifestyle factors push business investment growth above capital cities as companies look to tap into the growing labour market, according to Westpac.
Westpac business lending to regional areas has increased 12.4 per cent over the past two years, while metro areas have seen an 11.3 per cent increase, according to the data, which shows the highest growth regions by percentage for Westpac business lending from November 2022 to October 2024. Regional centres where Westpac is seeing the highest percentage growth for business lending are Coffs Harbour, Launceston, Tweed Heads, Bendigo, Mackay and the Gold Coast.
The trend in regional Victoria is particularly pronounced, with an 18 per cent increase in Westpac business lending in the regions compared with 9 per cent in metro areas. In Tasmania, the regions saw 25 per cent business lending growth while Hobart recorded a more subdued 10 per cent increase.
Westpac commercial banking general manager Shane Howell said as Australians move from capital cities to regional areas due to more affordable housing and lifestyle factors, Australian businesses are following suit.
“The in demand localities are where it is often cheaper to do business than in capital cities, so businesses can minimise risk, and they’re thriving regional hubs where young families are increasingly relocating, giving businesses access to talent in a tight labour market,” he said.
“Some of the key industries experiencing growth include services like healthcare and education, as well as manufacturing, industrial logistics, property and agriculture.”
Georgie Stevenson, the co-founder of Gold Coast-based supplements brand Naked Harvest, which sells online and through 550 Terry White pharmacies, says business is booming.
She is aiming for “huge double digit growth” this year, as well as focusing on international expansion which could create up to ten new jobs. The business, which has a warehouse at Burleigh Heads, already employs 25.
“Being a wellness brand, we feel that health + wellness are a part of the GC culture - it’s been a great way to find incredible, aligned team members,” she said.
“We love that everyone naturally focuses on their health, being more intentional with work life balance and a cheeky afternoon stroll at the beach – it’s definitely a privilege to be able to be located here.”
Businesses across the country have faced immense challenges in the past two years by a combination of rapid interest rate rises, rising operating costs including and weaker consumer sentiment. This has led business failures to surge by 50 per cent this financial year.
Last year’s record high of 11,053 company collapses is expected to be smashed over coming months, with insolvency appointments forecast to reach up to 16,000 this financial year, even if the Reserve Bank cuts interest rates.
Westpac said in some states metro areas are still dominant for business lending growth, including NSW, WA, QLD and SA, and in all states except Tasmania the volume of business lending remains higher in the population dense capital cities.
Mr Howell said that the trend of doing business and investing in regional Australia was real from conversations he has had with clients, adding that there would be more growth in regional areas over the next decade.
“Australia is a country of rich diversity and geographical complexity, and our business customers reflect that diversity,” Mr Howell said.
“No two states or segments are the same and each has its own unique challenges and opportunities. For example, in this environment where discretionary spending is tight, we’re seeing constrained growth in industries like hospitality and retail, but it’s a different story for industries like professional services and healthcare, which are performing strongly.”
In Victoria, South Wimmera saw the strongest growth with lending up 56.2 per cent, while Hopkins was up by 38.4 per cent and Bendigo lifted by 36.9 per cent, all significantly more than Melbourne which was the weakest metro area in the country.
“Businesses are recognising the opportunity of the regional renaissance in Victoria, with more people moving out of the CBD for lifestyle and cost of living factors and businesses are making the most of cheaper land prices and regional councils who are often easier to work with because they want to attract businesses to the regions,” Mr Howell said.
Coffs Harbour, Central Macquarie and Tweed Heads were the business hotspots in NSW with lending up by 67.5 per cent, 52.4 per cent and 38.4 per cent respectively.
Fitzroy Shire and Mackay led the way in Queensland with growth of about 35 per cent, while Naracoorte, Robe and Kingston saw the sharpest increase in lending in South Australia by 36.4 per cent.
Lending Tasmania was led by Launceston, which lifted 38.6 per cent, Pallinup in Western Australia by 50.3 per cent and the upper south east region of South Australia by 33.1 per cent.
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