Population shifts, cost advantages, and industry growth driving regional economic activity
Regional Australia is outpacing capital cities in business lending growth, according to new data from Westpac.
Over the past two years, business lending in regional areas has risen by 12.4%, compared to an 11.3% increase in metropolitan areas. The findings highlight growing economic activity in key regional centres.
Westpac’s analysis, covering the period from November 2022 to October 2024, shows the strongest lending growth in regions such as Coffs Harbour, Launceston, Tweed Heads, Bendigo, Mackay, and the Gold Coast.
Shane Howell (pictured above), general manager of commercial banking at Westpac, linked the trend to broader population shifts.
“As we’re seeing more Australians move from capital cities to regional areas in search of more affordable housing and lifestyle factors, Australian businesses are following suit,” Howell said.
Victoria is leading this regional shift, with business lending increasing 18% in regional areas, compared to a 9% rise in metropolitan centres. Tasmania’s regional lending surged 25%, while Hobart lagged with just a 10% increase.
“While this data shows only Westpac business lending growth, in most regions, it’s representative of economic activity overall,” Howell said.
Regional hubs offer advantages such as lower operating costs, which are drawing businesses from higher-cost capital cities. Howell said industries such as healthcare, education, manufacturing, property, and agriculture are thriving in these areas.
Victoria’s regions are especially attractive to businesses, despite broader concerns about the state’s economy.
“While we’ve seen a lot of media coverage about constrained business growth in Victoria recently, our data and experience tell us that doesn’t apply to regional areas – quite the opposite,” Howell said.
Lower land prices, strong council support, and a growing population are contributing to the rise in business activity.
In Tasmania, an ageing population is driving healthcare investment in regional areas. Agribusiness also remains a significant contributor to the state’s economy, which helps explain why regional lending is outpacing Hobart.
The Gold Coast, meanwhile, continues to experience rapid economic growth. Howell attributed this to major construction activity, housing growth, and effective planning policies.
However, in some states, metro areas remain dominant for business lending growth. This includes New South Wales, Queensland, Western Australia, and South Australia. In all states except Tasmania, the overall volume of lending is still higher in capital cities due to their larger populations and business hubs.
“Australia is a country of rich diversity and geographical complexity, and our business customers reflect that diversity,” Howell said. “The trend towards doing business and investing in regional Australia is very real, and I think we’ll see a lot more growth in regional areas over the next decade.”
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