Regional property markets outpace capitals as hotspots shift
As capital city property values soften, regional Australia is emerging as a resilient alternative for homebuyers seeking better value and livability. Recent data shows regional areas matching or outpacing capital city growth rates and rental performance.
Regional property markets outpace capitals as hotspots shift
National home‑price data for June showed capital cities slipping 0.4 per cent, with Sydney down 0.5 per cent and Melbourne down 0.4 per cent, according to the PropTrack index. Strip the two biggest markets out and the picture changes: regional areas recorded no change, regional NSW rose 0.1 per cent and regional Queensland fell 0.1 per cent. Realestate quoted Kane Dury, principal of Discover Buyers Agency, who said the “‘downturn’ narrative” is really a “Sydney and Melbourne story”.
“Overall values fell in June because Sydney and Melbourne prices softened… Strip out the biggest cities, however, and you’ll find regional Australia not just holding up, it’s outperforming the capitals on almost every measure.”
Media additions
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Kane Dury, principal, Discover Buyers Agency, via realestate.com.au
That regional resilience is not a flash‑in‑the‑pan blip. Cotality’s quarterly figures for July marked the first time in nine months that regional areas’ value growth matched that of the capitals at 1.7 per cent. John McGrath of McGrath Realty noted that the “value gap” has been narrowing since January.
“It’s not just Australia’s capital cities that are undergoing a property market rebalance… the latter experiencing performance moderations very similar to capital cities.”
John McGrath, founder, McGrath Realty, via Realestatebusiness
Even the banking sector sees the trend. Commbank’s head of research Gerard Burg said, “With capital city prices still near record highs and stock levels tight, many households are once again looking to regional Australia for greater value and livability.” The Cotality data he cited showed regional dwelling values rising 3.2 per cent for the quarter, outpacing the 2.1 per cent rise in the combined capitals.
Rental markets echo the buyer side. CoreLogic’s three‑month update to the end of January 2025 recorded a 1.6 per cent quarterly rent rise in regions versus 0.3 per cent in capitals. Vacancy rates remain tight at 1.9 per cent nationally, with Western Victorian Warrnambool hitting a record low of 0.3 per cent.
Several towns have emerged as the new magnets for migration. The Regional Mover Index from CommBank’s June 2025 quarter showed a 26 per cent net outflow from capital cities, with New South Wales and Queensland leading the exodus. Liz Ritchie, CEO of the Regional Australia Institute, summed up the sentiment:
“Regional Australia is no longer a second choice. It’s the smart choice.”
Liz Ritchie, CEO, Regional Australia Institute, via Brokernews
Hotspots listed in the report include East Pilbara (Western Australia), Albury (NSW), Townsville (Queensland), Bendigo (Victoria) and Murrurundi (NSW). Sunshine Coast and Greater Geelong topped the migration charts, while the Albury‑Wodonga area attracted $7 million in state‑funded projects to bolster local infrastructure.
Yet not all regional markets are riding the same wave. CoreLogic warned that “momentum in most of these markets is shifting”, pointing to a halving of Gladstone’s quarterly growth and a 2.6‑point slowdown for Geraldton since its August peak. Kaytlin Ezzy, CoreLogic economist, noted that “Queensland and Western Australia markets have driven regional growth for more than a year; however, they are now clearly losing steam.”
In contrast, New South Wales towns such as Bathurst, Taree and the Victorian centre of Warrnambool are showing “green shoots”, with Bathurst moving from a 1.8 per cent decline in October 2024 to a 4.2 per cent increase by January 2025.
Capital‑city price falls have sharpened the comparison. Cotality reported that Sydney, Melbourne and Canberra saw median house prices dip in May—the first decrease since January 2025—prompting analysts at Morgan Stanley to predict a possible 10 per cent slide nationally. Tim Lawless of Cotality cautioned that “the price fall in May could be the start of a significant year‑long decline”.
“I don’t think we’ll see the market turn around until we see interest rates coming down … probably [in the] second half of next year.”
Tim Lawless, analyst, Cotality, via The Guardian
For investors, the outlook is a blend of opportunity and caution. John McGrath highlighted that the 50 largest non‑capital “Significant Urban Areas” posted 1.5 per cent growth in the April quarter, outpacing the 1 per cent gain across capitals. Yet he warned that “dwelling growth remained uneven, with regional NSW among the slowest‑growing areas nationwide”.
Housing Minister Clare O’Neil told ABC’s Insiders that “the tax changes we are making in the budget are not the main driver of that” price moderation, reinforcing the view that interest rates remain the dominant force.
What to watch next
Quarterly Cotality releases: any divergence between regional and capital growth rates.
State‑level infrastructure spend: projects like the Albury‑Wodonga Advanced Manufacturing Centre may fuel further migration.
Rental vacancy trends: sustained sub‑2 per cent rates could pressure rents and prompt policy responses.
Regional vs Capital Growth – Quick Comparison (Quarterly)
