Regional property markets surge as capital cities show signs of decline

While the property market in Australia’s major cities is showing signs of a downturn, regional areas are experiencing a notable boom, according to industry experts. Kane Dury, principal of Discover Buyers Agency, has highlighted the disparity between the capital cities and regional centres, urging buyers to look beyond the headlines that focus on Sydney and Melbourne.

“Buyers are being told the market has turned, and they’re sitting on their hands. But that’s not what the data actually says about locations beyond the capitals,” Mr Dury explained. He emphasised that the national statistics often skew towards the performance of Sydney and Melbourne, masking the growth in regional areas. “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.”

The latest data from Cotality’s Home Value Index reinforces Mr Dury’s observations. National dwelling values slipped by 0.4 per cent in June, marking the sharpest monthly fall since December 2022. This decline was largely driven by a 1.3 per cent decrease in combined capital city values over the June quarter, with Sydney experiencing a 3.2 per cent drop and Melbourne a 2.6 per cent fall. In contrast, regional values rose by 1.1 per cent during the same period. On an annual basis, regional dwelling values surged by 11.8 per cent, significantly outpacing the 7.8 per cent increase in combined capital cities.

“That’s a complete reversal of the old assumption that the regions lag the cities. Right now, it’s the capitals lagging the regions,” Mr Dury noted. He pointed out the affordability factor, with the median dwelling value across regional Australia at approximately $770,000 compared to over $1 million in the capital cities. “For everyday buyers and investors, that’s the difference between being in the market and being locked out of it.”

The way national property statistics are constructed contributes to the misconception about the market, Mr Dury argued. “When people hear ‘the Australian market fell last month’, what they’re really hearing is that Sydney and Melbourne fell. Those two cities alone carry so much weight in the national figures that they can drag the headline number down even while dozens of other markets are doing well,” he said. He added, “There is no such thing as ‘the Australian property market’. There are hundreds of markets, and right now many are moving in opposite directions.”

Mr Dury emphasised the importance of local-level indicators such as vacancy rates, days on market, the ratio of owner-occupiers to renters, listing volumes, local population growth, and the diversity of the employment base. “A suburb with a vacancy rate under one per cent, homes selling in a fortnight and seven in ten homes owned by the people living in them tells you far more than any national number ever will,” he explained.

The regional market surge is attributed to several structural factors, including severe rental shortages, affordability pressures, internal migration, and limited new housing supply. “Higher interest rates and the new investor tax settings have knocked confidence in the big cities, but they haven’t changed the fundamentals in the regions with too many people chasing too few homes,” Mr Dury said. He added that the centres performing best are not reliant on a single industry but have diverse economic bases, such as health, education, defence, agriculture, and manufacturing.

Mr Dury identified several regional cities offering strong value, rental demand, and economic diversity for buyers with budgets between $700,000 and $1 million. These include Toowoomba, Townsville, Mackay, Geelong, Bendigo, Ballarat, and Wagga Wagga. For instance, Toowoomba is noted for its “double-digit annual growth, an economy spanning health, education, agribusiness and the Wellcamp airport and logistics precinct,” with established homes available under $800,000.

However, Mr Dury warned against the allure of new builds and house-and-land packages, which often come with a premium price due to built-in commissions. “In almost every one of these centres, the worst-performing purchases are brand-new builds, sold at a premium with commissions built into the price,” he cautioned. Instead, he advised focusing on established homes in proven suburbs close to key amenities like hospitals, schools, and employment hubs, as these areas offer scarcity, which drives growth.

“Every buyer’s situation is different, and the right centre depends on your budget, strategy and timeframe. But the window in these markets won’t stay open forever. The rest of the country will eventually read past the headlines and the buyers who act before that happens will be the ones smiling in five years’ time,” Mr Dury concluded.