According to the latest CoreLogic Regional Market Update Australia’s regional housing markets once again outperformed their capital city counterparts amid favourable conditions for investors and lifestyle appeal driving buyer confidence.
Queensland and Western Australia topped value growth, rents and rental yields as dwelling values in regional areas rose 1.1% over the September quarter, beating the 0.8% growth recorded in capital cities.
CoreLogic Australia economist and report author Kaytlin Ezzy said: “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%.”
“Regions like Mackay, Geraldton, and Townsville are seeing exceptional growth, driven by affordability advantages compared to our major cities, as well as lifestyle appeal,” Ezzy said.
“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.”
“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,” Ezzy said.
Meanwhile, coastal towns suffered over the quarter with popular holiday destination Batemans Bay on NSW's south coast recording the largest drop at 2.7%, followed by Victoria’s coastal city of Warrnambool, falling 2.6%.
The report outlined that the downturn in regional coastal and lifestyle areas of Victoria and NSW was driven in part by these areas outperforming during COVID, as 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,” Ezzy said.
“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.”
Elsewhere, regional rental markets have outperformed the capital cities after rents grew 0.5% over the quarter compared to flat conditions in the major cities.
In Albany, southeast of Perth saw the strongest regional rental market gains with a 3.0% quarterly increase in rent, followed closely by Mount Gambier in South Australia at 2.7%, while the Bowral–Mittagong region in NSW recorded the lowest gross rental yields at 3.2%.
“Rental markets where there’s been strong quarterly increases are experiencing a combination of strong tenant demand and constrained supply,” Ezzy said.