Overview
Regional property markets are now outperforming capital cities, with dwelling values up 3.2% over the three months to January versus 2.1% across capitals, driven by affordability pressures, internal migration and tighter competition outside the cities.
Momentum is broad‑based and accelerating, led by regional Western Australia (up 6.1%), with Wagga Wagga the strongest individual market nationwide (+8.1%), while NSW and Victoria lag and record isolated declines.
Regional Australia has extended its lead over the capital cities, with dwelling values rising 3.2 per cent over the three months to January, compared with a 2.1 per cent increase across the combined capitals.
The result marks a clear shift in market momentum as affordability, renewed internal migration and competitive conditions direct more buyers towards regional areas.
Cotality’s February Regional Market Update shows that regional value growth has gathered pace since the previous quarter (3.0 per cent in October), while capital city markets have slowed from 3.3 per cent.
Almost three in five of the country’s largest regional Significant Urban Areas (SUAs) recorded a faster pace of growth than the October reading, underscoring the breadth of the upswing.
Gerard Burg, Cotality’s Head of Research for Australia, said the results point to a deepening divergence between city and regional markets.
“Affordability remains a powerful driver of buyer behaviour. 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 liveability,” Mr Burg said.
“We’re seeing momentum build across a wide range of regional markets, from inland hubs to coastal centres and mining adjacent regions.”
“This reflects a renewed movement of people and capital into areas where buyers’ budgets stretch further and competition for available homes is strong.”
Western Australia leads quarterly growth
Regional Western Australia recorded the strongest uplift of any state, with values rising 6.1 per cent over the three months to January, up from 4.9 per cent previously. Albany (7.7 per cent), Kalgoorlie‑Boulder (7.6 per cent) and Busselton (7.0 per cent) were standout performers, with Bunbury and Geraldton also exceeding the average rate of growth. In contrast, Broome (0.8 per cent) and Port Hedland (1.6 per cent) delivered comparatively softer results.
Wagga Wagga was the strongest individual performer across the country, posting an 8.1 per cent rise in values over the quarter.
Queensland and South Australia also recorded stronger conditions compared with October, led by Toowoomba, Bundaberg and Cairns for the former and Victor Harbor–Goolwa for the latter.
By comparison, growth was more subdued in New South Wales (2.5 per cent) and Victoria (2.3 per cent), with both states showing little change from the previous quarter. These were also the only states to record localised declines, including Bowral–Mittagong (‑2.1 per cent), Warrnambool (‑0.4 per cent) and Batemans Bay (‑0.4 per cent).
“Selling conditions in the two NSW markets were relatively weak, with time on market close to 70 days. This suggests that the local supply-demand balance was looser than in most other regional localities,” Mr. Burg added.
Selling conditions tighten in high growth markets
Selling conditions remained most competitive in WA and Queensland, with median time on market at 20 and 24 days respectively and vendor discounting averaging 3.3 per cent in both states.
Albany had the shortest selling time nationally at just 10 days, while 12 SUAs across WA and Queensland recorded a median below 20 days.
Regional rents accelerate as vacancy remains tight
Rents also rose faster than their city counterparts in the three months to January, with regional rents rising 1.6 per cent, slightly ahead of the capital cities (1.4 per cent).
Over the past five years, regional rents have risen 41.9 per cent, far outpacing wage growth of 17.5 per cent and reinforcing mounting affordability pressures.
“As with their city counterparts, rental affordability has deteriorated for residents in the regions. Cost pressures and labour shortages have held back supply across the country, and the stock of regional homes hasn’t expanded fast enough to absorb the added demand from internal migration away from the capitals.”
Only four of the 50 largest regional markets recorded a fall in rents in the quarter, led by Hervey Bay (‑0.5 per cent). Tasmania saw some of the fastest increases, with Devonport (5.0 per cent), Launceston (4.3 per cent) and Burnie‑Somerset (3.2 per cent) all posting strong gains.
Albany (16.9 per cent) and Devonport (11.8 per cent) led annual rental growth.
