Phil Taylor was backpacking around the world when he stumbled across the coastal haven of Byron Bay.

“For a kid from rural New Zealand, the place was a dream come true.”

He eventually put down his roots in the surf town and took over a local institution — the Byron Bay General Store.

“Byron had this beautiful undercurrent as a solid, working-class town in a sense that had this magic about the place — people were always coming and going, and there was all this entertainment and live music and new people,” he said.

Mr Taylor spent years enjoying the surf breaks that were held as closely guarded secrets by locals, and it wasn’t until two decades later he began to sense a change.

The seventies vibe that had attracted him was limping along as the characters — those who, according to Mr Taylor, brought colour and life to the town — were slowly leaving town.

In their place, Hollywood high rollers — including Zac Efron, who briefly dated a waitress at his store — began frequenting his business.

Experts had warned about the impact of gentrification on small regional towns ahead of the pandemic, but the global crisis saw internal migration figures climb.

Many Australians were selling up homes in capital cities and moving to the country in a bid to cut down on their expenses, and the Australian Bureau of Statistics found regional Australia had kept the trend since the height of the pandemic.

In the last financial year alone, regional Australia grew by 117,300 people, or 1.4 per cent.

Locals have been priced out of Byron Bay.(ABC North Coast )

While many councils welcomed the increase in population, for locals like Mr Taylor, there was a price to pay.

Mr Taylor said he watched as house prices began to climb, the cost of doing business escalated and the vibrant town he knew irreparably changed.

“It was a slow, gradual process, but it definitely sped up with the COVID pandemic,” Mr Taylor said.

“That was the nail in the coffin, for the end of an era.”

“These people were moving in, and the hardest thing was, you couldn’t blame them,” he said.

“The problem was they had such a huge abundance of financial capacity, and of course, they simply steamrolled the locals; all the working-class people.

“They were the people that really brought the energy and the vibe.”

Mr Taylor said when he accepted Byron Bay had become a shadow of the community he once loved, he decided it was time to leave.

Byron Bay has become one of the most expensive places to live in Australia, despite its regional location.(Supplied: Byron Bay General Store)

“I actually sold the business and got out of there completely, because the reason around why I lived in that town and loved it was because it had been an oasis where I thought the sense of community and the beach would remain forever.

“I saw that changing, and I realised, I don’t want to be a part of this.

“Change is an unfortunate constant, and I don’t want to be that bloke whingeing about how good it used to be, so I left.”

He moved back down the coast over the next few years, towards the most expensive capital city in the country.

However, rather than being forced to pay more to move closer to Sydney, Mr Taylor found his living expenses — including moving into a rental — were significantly cut.

Byron Bay is one of many communities struggling to juggle the mix of holiday and permanent rentals.(ABC North Coast: Matt Coble)

The affordability illusion

Dr Tony Matthews from Griffith University said it was no longer correct to say that living regionally was the economical choice it once was.

“You might have what could be considered a relatively affordable property market in an out-of-the-way regional location, and then that place becomes popular for one reason or another,” he said.

“That uplifts property prices and in turn rental prices, and suddenly all the people that were previously able to afford to live there, are now no longer able to afford to live there.”

Dr Matthews says the assumption that living regionally will be cheaper is no longer true.(Supplied)

Research from the Regional Australia Institute (RAI) has found the number of people moving from cities to Australia’s regions has hit a 12-month high, which has driven up property prices across the country.

“Regional living continues to hold sway, with around 24.2 per cent more people moving from the cities to the regions than back in the other direction, in the March 2024 quarter,” the report found.

“This compares to an average 21.9 per cent spread in the two years before COVID.”

Along with housing, the cost of living in regional Australia is also at a high with an increase in natural disasters driving up insurance and freight costs, which has in turn forced up the price of groceries in parts of the country.

While figures continue to show a significant move to the regions, it remains unknown how many regional Australians have been displaced in recent years due to the steady flow of internal migration.

The average rental price across regional Australia according to CoreLogic is $544 per week.

In northern WA, which encompasses both tourism towns and mining regions, the average rental price is $881 a week in the town of Broome.

On the east coast, Mornington Peninsula rent is about $675, and $770 on the Sunshine Coast.

In Australia’s premier wine region of Margaret River, it’s about $634.

In Mr Taylor’s old town of Byron Bay, rent can reach up to $1,200 a week.

The median house price peaks on the Sunshine Coast, at $1,044,279, followed by Illawarra, Richmond and Tweed, and Southern Highlands and Shoalhaven.

The average regional house value in Australia is $627,872.

Dr Matthews is an urban planner who forecasted gentrification in parts of the Sunshine Coast during the height of the pandemic and said it was clear that parts of the Sunshine Coast, regional Western Australia and the northern New South Wales coast had changed in recent years.

He said the increasingly mobile workforce meant capital city income was making its way to regional town centres and pricing out long-term residents.

Dr Matthews said this exposed some councils for failing to adapt to the upwards trend of internal migration.

“That’s partly giving people cause to reconsider regional life as well,” he said.

Dr Matthews said proactive planning for gentrification — filling service gaps in health and education for a larger population — would be key to protecting the fabric of communities in the future.

While some councils were proactive in addressing ballooning populations, a spiralling cost of living and gentrification, Dr Matthews said it was important for regional Australia to remain on alert.

“I suppose gentrification is one of these things that’s either good or bad, depending on your perspective,” he said.

“You could take it to mean that there’ll be an uplift in both the quality of places and [services].

“But [gentrification] is also an inevitable consequence of more people moving to the regions.”

Mr Taylor said while he was happy with his choice, he remained hopeful parts of Australia impacted by the changes he saw over the pandemic would find their way back.

“We saw it when we got sideswiped by the [NSW] floods … it was brutal,” he said.

“But what it did was it brought the original community back together.

“I witnessed and experienced a sense of community that I thought had been lost in that town — but it did show me that people were still there and they were all feeling the same way I was.

“You know, they just needed a reason to be doing something good again.

“It made me realise how lucky I was to be a part of that community.”