Coffs Harbour (pictured) on the northern New South Wales coast is among the regional centres that are seeing strong demand for business credit. (Getty)
From Coffs Harbour to Bendigo, Australia’s regions are seeing strong growth in business credit despite the prevailing economic headwinds, underlining their attraction as places to live and work.
Westpac’s lending to businesses in regional areas has increased 12.4 per cent over the past two years, outpacing growth of 11.3 per cent in metro areas, according to the bank’s lending data.
“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 General Manager of Commercial Banking.
Locations where Westpac is seeing the highest percentage growth for business lending include Coffs Harbour, Launceston, Tweed Heads, Bendigo, Mackay and the Gold Coast.
“While this data shows only Westpac business lending growth, in most regions it’s representative of economic activity overall,” Howell said.
The data aligns with the findings of Westpac’s latest business snapshot, published in November, which showed that businesses are positioning themselves for growth once the economy picks up. Credit and investment grew strongly in the September quarter, with businesses increasingly looking to invest in new equipment and technology to boost their productivity.
Still, Howell acknowledged that the tough trading environment was having an impact in some sectors.
“No two states or segments are the same and each has its own unique challenges and opportunities,” he noted. “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.”
Regional centres are often cheaper places to do business than capital cities, while an influx of young families in search of more affordable housing and a better lifestyle is increasing the available pool of talent in a tight labour market.
Other industries where the bank is seeing growing demand for credit in the regions include manufacturing, industrial logistics, property and agriculture.
In Victoria, lending growth in the regions rose by 18.1 per cent for the period from November 2022 to October 2024, well above growth in the metro areas of 9.1 per cent.
“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.
“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.”
In Tasmania, the fast-growing aging population is seeing strong investment in healthcare businesses. Meanwhile, the state’s thriving agribusiness sector is driving a surge in regional business lending, up 25 per cent since 2022.
The Gold Coast is also enjoying strong and diverse business investment, with Howell reporting a “tangible shift in momentum”, particularly focused in the housing and construction sector.
“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,” he said.
James Thornhill was appointed as editor of Westpac Wire in May 2022. Prior to joining the bank, he was a business and financial journalist with more than two decades of experience with international newswires. Most recently, he was a resources correspondent for Bloomberg, covering the mining and energy sectors, and previously reported on a broad range of topics from economics and politics to currency and bond markets. Originally from the UK, he’s had stints working in London, New York and Singapore, but is now happily settled in Sydney.
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