Australia Housing Market Update: Regional Cities See 20% Price Jump

Discover which regional cities in Australia have experienced a 20% increase in property prices in the past year, outpacing the capital cities.

Real estate values in Australia’s capitals have seen rapid growth over the past year, outpacing the regions. However, a recent analysis of real estate prices in Australia’s 30 largest regional cities has uncovered a select few where prices are surging ahead at a comparable, if not faster, rate than the strongest capital city markets. In fact, there are 13 regional cities across Australia where median house values have grown more than the 7.66% growth recorded in the combined capitals over the past year, and 12 regional cities where unit prices have outpaced the 5.22% lift seen in the capitals.

The majority of Australia’s thriving regional cities are concentrated in Western Australia and Queensland, two of the most robust regional markets in recent times. Notably, Perth is not the only Australian city experiencing growth rates exceeding 20%, as other large regional Western Australian cities like Bunbury for houses and Busselton for units have also witnessed significant price increases.

In Western Australia and Queensland, house prices in most of the largest regional cities have seen annual growth rates exceeding 10%, with unit prices following suit. In New South Wales, Tamworth stands out as the only regional city where price growth has outpaced the state capital Sydney, with house prices in the northern NSW inland city growing by more than 10%. However, house and unit price growth in the remaining largest regional NSW cities has been on par with or slightly slower than Sydney.

The data, sourced from PropTrack's automated valuation model (AVM), reveals that while prices have risen in most regional cities over the past year, there have been declines in a few areas, primarily in regional Victoria where values have dropped by approximately 1% overall. Victoria and the Northern Territory are the only states where values in regional markets have seen a decline over the past year, according to the latest PropTrack Home Price Index.

The shift towards regional living gained momentum during the pandemic, as lockdowns prompted many city-dwellers to seek a change in lifestyle and relocate to the regions. This surge in demand has contributed to strong price growth in regional areas, outperforming the cities. However, as society has started to normalize, workers have returned to offices, and overseas migration has resumed, the trend of moving away from cities to regional areas has slightly eased.

The data indicates similar trends across large regional cities, albeit at varying stages in the property cycle. Regional NSW and Victoria experienced early value uplifts in 2020, with total increases of 53% and 40% respectively. While values have continued to grow strongly over the past year, the total prices have surged by 60% since the pandemic, aligning with the national average.

In Western Australia and Queensland, cities like Bunbury and Busselton have seen remarkable growth, with house and unit prices rising significantly. These cities share common attributes with other high-performing regional locations, such as a coastal position, proximity to major cities, and relatively affordable property prices.

Investor activity has played a significant role in driving up prices in cities like Townsville, Rockhampton, and Bundaberg in Queensland, as well as Toowoomba and the Gold Coast. While the Sunshine Coast saw more modest price increases of about 8%, this follows several years of exceptional growth since the pandemic, with prices doubling in some suburbs.

The trend of city-dwellers relocating to regional areas has continued, with a surge in regional relocations observed in the first quarter of this year. While the pace of relocation slowed after pandemic restrictions were lifted, the number of people moving from capitals to regional areas remains 20% higher than pre-pandemic levels. The Sunshine Coast remains a popular destination, attracting the highest percentage of regional movers, followed by the Gold Coast and Geelong.

According to Regional Australia Institute chief executive Liz Ritchie, the appeal of the regional lifestyle goes beyond a temporary response to lockdowns, describing it as a societal shift driven by factors like high house prices and cost-of-living pressures in cities. Millennials, in particular, are leading this migration, seeking more affordable homes and better job opportunities in large regional centers.

The real estate market in Australia’s regional cities has shown remarkable resilience and growth, outpacing the capitals in many instances. While the trend of city-dwellers relocating to regional areas continues, the market dynamics are evolving as society adjusts to post-pandemic realities.