Australia's regional property markets are no longer fringe plays.
Anchored by relative affordability, rental growth, and shifting demographic preferences, the once quiet areas Down Under are capturing investor interest.
While capital cities have stumbled (though they are starting to pick up the pace), regional markets continue to thrive. According to the latest Cotality Regional Market Update, regional dwelling values rose 1.5% in the three months to April, outpacing the 1.0% quarterly growth in the combined capitals.
Landlords in regional Australia are also seeing better results, with a 5.5% lift in regional rents over the year to April, almost double the 2.9% increase recorded across capital cities. Of the top 50 non-capital city Significant Urban Areas (SUAs), only one recorded a quarterly decline in rents, and all saw rental values rose over the year.
Gross rental yields across those SUAs have remained relatively stable at 4.4%, expanding in 25 markets, compressing across 16, and steady at nine, per Cotality. Compressed rental yields could also signify stronger capital growth.
Regional markets outperforming capital cities also isn't new. The regions began outpacing the capitals in property growth during and following the Covid pandemic.
Looking back at Cotality's (still called CoreLogic then) quarterly Regional Market Update in 2022, the median dwelling value across the combined regions jumped 26.1% in the year to January. In that same period, combined capital city dwelling growth was lower at 21.3%.
All this came at the time when price growth was expected to decelerate following the peak growth rates in 2021, but still at the tail end of the pandemic-led spike.
However, the outperformance has become more pronounced over the past year.
In the quarter to January 2024, regional dwelling values rose 1.2%, compared to 1.0% growth in capital cities. Cotality even noted this trend - the outperformance outside pandemic growth - as a "fairly new phenomenon" then. However, analysts were quick to attribute it to a slowdown of the capitals rather than an acceleration in the regions.
While the latest regional market report of the property analytics firm has shown the gap of growth trends between the two markets is narrowing, and momentum is easing in recent high-growth regional markets, the regions remain strong and resilient, indicating that the surge is more than pandemic-driven.
"The recent convergence has less to do with the decline in pace in the regions but more with the uptick in pace of growth in capitals, with the latter bouncing back thanks to the recent interest rate cuts," Cotality economist Kaytlin Ezzy told Your Investment Property Magazine.
"Regions are doing quite strongly and remain fully resilient," she added.
Kaytlin Ezzy, economist at Cotality (Image from LinkedIn)
Temporary blip? Not quite
Remote work, lifestyle shifts, and lockdowns during the pandemic were key factors identified to have resulted in this divergence between the two markets.
"Capital city markets tend to be quite impacted by net overseas migration, whereas regional markets have been more resilient as they don't get much demand from overseas migration," Ms Ezzy explained.
Despite the effects of the pandemic winding down, regional markets maintain their lead versus the capitals, confirming that the region-city performance gap is not just pandemic-driven.
In the first three months of 2025, the Regional Australia Institute (RAI) and Commonwealth Bank Australia (CBA) reported that capital city to regional locations surged by almost 11%, bringing the figure to 20.5% above the pre-Covid average.
"The nation's love affair with regional life is showing no signs of abating, with 25% more people moving from capital cities to the regions than back in the opposite direction," RAI CEO Liz Ritchie said.
The latest Regional Movers Index (RMI) shows net migration to regional Australia is now sitting 40% higher than the prevailing level in the pre-pandemic era.
"The regions' enviable lifestyle offerings, buoyant jobs market, position as an economic leader and diverse communities are proving to be an ongoing lure, particularly for those in metropolitan areas," Ms Ritchie said.
"Contemporary regional Australia has what people are looking for, and it's clear clichéd images and misconceptions about regional living are well and truly a thing of the past."
Urban folks making the move
When Rebecca Saunders and her husband left their apartment in Sydney to purchase a home in Mudgee, the move wasn't driven by the pandemic.
"While we purchased a home at the end of Covid, it wasn't a typical 'Covid move'. In fact, Covid was incredibly busy for me," Ms Saunders, who runs a video production company, told Your Investment Property Magazine.
Rebecca Saunders now lives in Mudgee with her husband and their dogs. (Image supplied)
"We'd always talked about moving out of our apartment and owning a home - we just hadn't quite figured out where that home would be. We're child-free by choice, and many of Sydney's suburbs felt very family-oriented, which didn't quite suit the lifestyle we're looking for."
Shifting lifestyle preferences and relative affordability compared to capital cities continue to fuel regional markets' lead. More breathing space, tight-knit communities, and proximity to nature that regional Australia offers have lured even those who were enjoying a cushy life in the city.
"Prior to moving to the Gold Coast, I worked in the magazine industry in Sydney," Keeley Henderson shared. "It was an exciting time filled with fabulous opportunities."
From living a fast-paced life that involved flying to London to interview celebrities and staying in a beachfront bungalow with her own butler in Mauritius, Ms Henderson's priorities shifted when she and her partner had their first child.
Keeley Henderson with celebrity chef Jamie Oliver. (Image supplied)
"We were living in an apartment in Cronulla, and our son was constantly trying to climb the balcony railings as soon as he could crawl. It was terrifying," she related.
"That's when I started thinking about a different kind of life - one with more room to grow, ideally with a garden and a family dog, like the one I had during my childhood."
However, buying a house in and around Sydney was out of reach for them at the time. The Gold Coast presented a viable option - it's more affordable compared to other coastal areas in Sydney or Melbourne until now (median house price of around $950k versus Sydney's $1.4m as of April 2025). It's also close to the major cities, and it comes with the allure of beachside living.
"We'd always loved the Gold Coast because it ticked every box: stunning beaches, a slower pace, proximity to Brisbane and Byron, and space we could actually afford. So we made the move," Ms Henderson said.
The regional lifestyle has also enabled Ms Henderson's career pivot. Discovering the "vibrant small business scene" on the Gold Coast, she founded Honey Bee Media, a content strategy business catering to professional service providers.
It might have been a medical emergency in the family at the height of Covid lockdown that sparked the idea for IVF scientist Lucy Lines to move from Melbourne to Mount Gambier, but it was the lower prices and the desire to live close to their loved ones that sealed the deal.
"Mount Gambier is where I grew up and where my family all still lived, so once we arrived and completed our two weeks of quarantine, we were surrounded by familiarity," she shared.
Affordability, space, and family ties led IVF scientist Lucy Lines to return and buy a home in Mount Gambier.
"Given Melbourne was still in lockdown, once the dust settled with my father's health, it felt a bit like a no-brainer to buy a home in Mount Gambier," she said.
"Prices were significantly lower than in the city (mortgage was less than what we were paying in rent in Melbourne), and the site of the house we could afford meant that we could get the dog we had longed for and have space for the kids to spread out."
Finding the 'sweet spot'
Property expert Brett Warren once said one of the mistakes "unwary investors" make is investing in markets outside of the major cities that lack essential lifestyle amenities or do not pass the "20-minute neighbourhood" concept.
This means neighbourhoods where essential services and amenities are within a 20-minute walk, ride, or drive - and he says they could outperform others in rental yield and capital growth.
"The fact is, 80% of a property's performance depends on its location and neighbourhood, and today's homebuyers are placing an unprecedented emphasis on lifestyle," Mr Warren said.
Cotality research director Tim Lawless concurred, adding that regional cities that tick the other growth fundamentals "will likely experience stronger demand".
Take Albany in WA, for example. The best regional market performer in the three months to May (5.7% value growth and 5.1% rental growth) is known for its lifestyle and infrastructure appeal, marked by stretches of beautiful coastlines, a diverse economy, and accessibility to Perth.
So while there are a lot of positive things Ms Lines can say about their move, there are a few challenges too.
"Attending conferences and meetings is more difficult given the public transport access to regional areas. There are only two flights out here each day, and only one carrier flies to Melbourne, so flights are wildly expensive," she said.
Mr Lawless said a regional market is in a "sweet spot" when it offers commuting options to a capital city, a lifestyle dividend, and affordable housing.
On the other hand, Mr Lawless said the performance of more remote regional markets would hinge on local economic factors, "with infrastructure projects impacting housing demand, and climate, weather, currency flows, and policies affecting farming or coastal areas".
Cottesloe Beach in WA
What's next for regional Australia
Based on the recent regional market report of Cotality, the pace of growth in regional Australia is starting to wind down as some markets have reached the levels that surpass affordability thresholds
However, Ms Ezzy believes the regions will continue to see capital growth in the coming years.
"While we are seeing affordability start to price some people out of the market, the lack of supply will continue to push prices higher," she said.
Similarly, the pace of rental growth across regional markets (as well as capital markets) has continued to lose momentum, with affordability constraints, a shift in household formation, and slowing overseas migration weighing on annual rental growth.
Despite the moderation, tight supply and shifting demand patterns are expected to drive rental growth.
Ultimately, the success of any investment ventures into regional Australia largely hinges on thorough research, local insights, and strategic property location. Experts highly suggest assessing whether the market is backed by growth fundamentals.
And from someone who made the move, these words apply whether you're an investor or a homebuyer considering relocating: "Take the time to visit potential towns, talk to locals, and really get a feel for the area," Ms Saunders said.
Header and additional in-text images from Unsplash
