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Westpac’s business lending to regional areas has grown by 12.4 per cent over the past two years, while metropolitan areas have seen a more modest increase of 11.3 per cent. The data, which covers the period from November 2022 to October 2024, revealed that regional areas have been the highest growth regions for Westpac business lending.
“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,” said Shane Howell, Westpac’s general manager of commercial banking.
In regional Victoria, the trend is particularly strong, with Westpac lending to businesses growing by 18 per cent compared to just a 9 per cent increase in metro areas. Tasmania has also seen significant growth, with regional areas recording a 25 per cent increase in business lending, while Hobart saw only a 10 per cent rise.
“While this data shows only Westpac business lending growth, in most regions it’s representative of economic activity overall,” Howell said.
Among the regional centres with the highest percentage growth in business lending are Coffs Harbour, Launceston, Tweed Heads, Bendigo, Mackay, and the Gold Coast.
“These are localities 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,” Howell said.
“Some of the key industries experiencing growth include services like healthcare and education, as well as manufacturing, industrial logistics, property and agriculture.”
The trend is particularly strong in Victoria, with Howell saying that despite recent media coverage about constrained business growth in the state, regional areas are experiencing the opposite.
“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 highly receptive regional councils who want to attract businesses to the regions,” Howell said.
In Tasmania, where the ageing population is growing the fastest in the country, healthcare investment is seeing significant growth.
“It’s also a state where the engine room of the economy is regional, thanks to thriving agribusinesses, so it’s no surprise that regional areas are outperforming Hobart for business lending and investment,” Howell said.
Meanwhile, the Gold Coast is one of Australia’s fastest-growing economic regions, driven by strong interstate migration and diverse business investment. Howell noted the region’s strong planning regime, which has allowed for continued economic expansion.
“Compared to larger cities, the Gold Coast still has more economic capacity to grow,” he said.
However, metro areas continue to dominate business lending growth in some states, including NSW, Western Australia, Queensland, and South Australia and, in all states except Tasmania, the volume of business lending remains higher in the population-dense capital cities.
“Australia is a country of rich diversity and geographical complexity, and our business customers reflect that diversity,” 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.
“One thing that’s clear in speaking with our customers, is that 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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