Australia’s regional housing markets are once again outperforming their capital city counterparts, with Queensland and Western Australia leading the way in value growth, rents and rental yields.

The latest CoreLogic Regional Market Update found dwelling values in regional areas rose 1.1% over the three months to October, exceeding the 0.8% growth recorded in capital cities.

While the pace of growth has slowed since earlier in the year, Queensland and Western Australia regions continued to dominate the top-performing- lists, taking out the top eight spots for quarterly value growth areas.

Mining markets were well represented among the best performers across a range of metrics, with Queensland’s Mackay (8.3%) the top area for quarterly growth, followed by Geraldton in WA, up 8.2%, and Townsville in QLD, up 6.6%.

Geraldton also recorded the strongest annual increase with dwelling values up 28.7% over the year to October, adding more than $100,000 to the median value.

Queensland’s Gladstone and Townsville also recorded significant annual growth of 27.2% and 26.9% respectively.

Regions like Mackay, Geraldton, and Townsville are seeing exceptional growth, driven by affordability advantages compared to our major cities, as well as lifestyle appeal.

This will have contributed to the strong demand but even with the impressive growth, for those with the capacity to service a mortgage, they still remain attainable with medians less than $600,000.

Conversely, across Australia’s largest 50 non-capital city Significant Urban Areas (SUAs), seven out of eight Victorian SUAs and 10 out of 21 NSW SUAs saw values fall over the three months to October.

The holiday town of Batemans Bay, on NSW’s south coast, recorded the largest decline, down -2.7% over the quarter, followed by Victoria’s coastal city of Warrnambool, down -2.6%.

Over the year, 10 markets in NSW and Victoria fell in value, with Ballarat recording the largest fall at -6.3%, followed by the St Georges Basin – Sanctuary Point region in NSW, and the Warragul – Drouin region in Victoria, both down -3.9% over the year.

The downturn in regional coastal and lifestyle areas of Victoria and NSW partially reflects their strong performance during COVID-19, when demand surged for affordable lifestyle markets and more space.

While these markets thrived during the early stages of COVID, reduced affordability and a range of headwinds have since softened conditions.

There’s certainly been a slowdown in demand for these areas and more stock on the market and that’s in addition to higher interest rates, cost of living pressures, and limited borrowing capacity.

Rental market resilience

Regional rental markets have also continued to outperform their capital city counterparts, with rents increasing 0.5% over the quarter compared to flat conditions in the capital cities.

Albany, southeast of Perth, was the strongest regional rental market, with a 3.0% quarterly increase in rent, followed closely by Mount Gambier in South Australia (2.7%).

Geraldton recorded a 14.6% lift in annual rent, equivalent to a $66 per week rental Increase, illustrative of strong rental demand, a shortage of available stock and possibly investor appeal.

Rental markets where there’s been strong quarterly increases are experiencing a combination of strong tenant demand and constrained supply.

Regional Western Australia also delivered the highest gross rental yields, with Kalgoorlie-Boulder recording a yield of 8.8% for the quarter, despite softening 70 basis points from a peak of 9.5% in March.

At the other end of the scale, the Bowral –Mittagong region in NSW continued to record the lowest gross rental yields at 3.2%.

Emerging sales trends

Sales activity has remained robust in many regional areas despite a broader slowdown in growth momentum.

Geraldton and Gladstone were standout performers, recording an increase in their annual sales volume of 44.2% and 34.3%, respectively.

Australia’s top-performing regional markets of WA and Queensland topped multiple selling metrics, with properties in some areas selling in two weeks or less with minimal vendor discounting.

Lifestyle appeal, relative affordability, and favourable conditions for investors drove buyer confidence in these regions.

Despite challenges such as high interest rates, affordability pressures, and economic uncertainty in other parts of the country, momentum in these leading regional markets remains strong.

About Kaitlin Ezzy
Kaytlin is a skilled research analyst and key member within CoreLogic’s research team. She specialises in collating large and customised data sets, data visualisation and residential data reports.
www.Corelogic.com.au