Regional property markets have outperformed sluggish capitals as buyers chase cheaper dwellings and lifestyles, with strong price growth, tight supply, and rising demand driving a surprising resilience nationwide.

New data showed that regional property markets have outperformed the capitals in the last quarter, showing the nationwide slowing in momentum has affected the regions to a lesser degree.

Cotality’s latest Regional Market Update showed regional dwelling values increased by 3.3 per cent in the three months to April, compared with a 1.1 per cent increase in the combined capitals over the same period.

Cotality’s head of research for Australia, Gerard Burg, said the results highlighted the resilience of regional markets in light of broader economic headwinds.

“We are seeing a clear loss of momentum at the national level, but regional markets are proving more resilient than their capital city counterparts,” he said.

“Affordability remains a central driver, with internal migration patterns continuing to favour regional areas where buyers can find greater value and a different pace of life.”

Western Australia led regional growth, rising 5.9 per cent over the three months to April, up from 5.6 per cent in the previous quarter.

Busselton recorded the largest quarterly growth of any Significant Urban Area (SUA) nationally at 7.5 per cent, followed closely by Albany (7.2 per cent), Geraldton (6.8 per cent), and Bunbury (5.8 per cent).
Annually, Regional Western Australia also recorded substantial gains, with values in Kalgoorlie-Boulder rising by 23.1 per cent, followed by Bunbury (22.3 per cent) and Busselton (22.0 per cent).

Queensland also recorded strong conditions, with Townsville (4.9 per cent), Maryborough (4.5 per cent), and Toowoomba (3.8 per cent) leading the quarterly growth.

Tasmania also saw renewed strength, primarily driven by Burnie-Somerset (4.8 per cent) and Launceston (4.8 per cent)

The data came after Cotality’s May Housing Chart Pack showed that in April, capital city home values were only 0.2 per cent higher.

A downturn has been projected for the capital city markets, amid a drop in demand and tightening of borrowing capacity due to rising interest rates and geopolitical issues.

Despite recording stronger value increases, regional rental growth lagged slightly behind the capitals over the past quarter, rising 1.8 per cent, compared with 2.1 per cent in the capitals.

However, the regional vacancy rate remained tight at 1.9 per cent, up only slightly from 1.8 per cent in January.

The data showed the vacancy rate was as low as 0.4 per cent in markets like Lismore, and 1.0 per cent in areas like Geraldton and Albany.

Burg said affordability remained a challenge for regional residents, with the supply of available homes unable to keep pace with demand from internal migration.

Gross rental yields remained stable at 4.2 per cent in April, higher than the 3.6 per cent recorded across the combined capital cities, with Kalgoorlie-Boulder remaining the highest-yielding major regional market at 8.1 per cent.

This article was first published on Real Estate Business, a sister-brand of Property Buzz.