Affordability and tight supply drive renewed demand in regional Australia
Regional property values across Australia have recorded their most robust quarterly growth since the onset of interest rate increases, according to the latest data from Cotality.
The November Regional Market Update from Cotality indicates that dwelling values in regional areas climbed 2.4% in the three months to the end of October, marking the highest quarterly growth in over three years. While capital city values rose by 2.9% over the same period, the report highlights a clear resurgence in regional markets.
Kaytlin Ezzy, economist at Cotality Australia, noted that the factors underpinning the current upswing differ from those seen during the pandemic. “Demand is being shaped less by lifestyle changes and more by affordability, constrained supply and competitive buying conditions in the capitals,” she said. “The latest results confirm a renewed uplift in value growth across the regions, with buyers seeking value and accessible price points.”
Of the 50 largest non-capital Significant Urban Areas (SUAs) in Australia, approximately 60% experienced faster growth in the three months to October compared to the previous quarter. Ezzy (pictured right) attributed this broad-based improvement to limited supply and increased buyer activity, supported by recent rate cuts and the First Home Guarantee scheme.
“Just like the capitals, buyers have become increasingly active across regional areas, with improved borrowing capacity coming up against constrained stock, helping to push values higher,” she said.
The report found that affordability remains a significant influence, with the strongest growth recorded in regions where property prices are comparatively lower. Regional Western Australia and parts of inland Queensland continued to outperform, while some areas that had seen little movement since 2022 are now showing renewed growth.
“As they have done for the past few years, Regional Western Australia and pockets of inland Queensland continue to be some of the best performing areas, but we’re also seeing renewed growth in some that had been flat since 2022,” Ezzy said.
Growth concentrated in affordable regional centres
Western Australia led regional growth, with Kalgoorlie–Boulder up 8.1%, Geraldton rising 7.4%, and Albany increasing 6.2% over the quarter. Mildura–Buronga, on the New South Wales–Victoria border, saw values rise 5.4%, while Toowoomba in Queensland posted a 5.3% increase.
Nineteen of the top 20 quarterly performers had median dwelling values below $1 million, with Busselton in Western Australia the only exception at $1,000,130. “The top 20 list last quarter is dominated by markets where median prices remain well below the nearest capital city, and that speaks to where buyers are looking for value,” Ezzy said.
Annual results also showed strong growth in many of the same regions. Albany recorded a 23.3% rise in the 12 months to October, adding approximately $136,000 to its median value of $721,253. Eight of the 16 other regions with double-digit annual growth were in Queensland, with others spread across New South Wales, South Australia, Western Australia, and Victoria.
Albany also had the shortest median selling time at 11 days and a median vendor discount rate of 2% over the year, second only to Mount Gambier in South Australia at 1.9%. Eight other markets, including Busselton, Mackay, and Rockhampton, recorded median selling times under 20 days.
“WA’s far south-west dominated many of the key indicators, yet momentum hasn’t been limited to one region or one price bracket. Strength is emerging across inland centres, coastal regions and mining-adjacent areas,” Ezzy said. “It comes down to where buyers can still find relatively affordable housing options and where stock remains tightly held.”
New South Wales lags behind other regions
The Bowral–Mittagong area in New South Wales was the only region among the top 50 to record an annual decline in values, down 1.2%. It also had the highest vendor discounting rate at 5.4% and the longest median selling time at 77 days.
“The southern highland region was a favourite among COVID-era city leavers but since peaking at the start of the rate tightening cycle the once darling region has lagged behind,” Ezzy said.
“Arguably, affordability, or lack thereof, has been a factor tempering demand. Despite being -13.5% or $181,901 below its May 2022 peak, the Bowral–Mittagong region continues to record the highest median value among the top 50 at $1,159,226.”
Bowral–Mittagong was also one of only four regions to see a quarterly fall, alongside St Georges Basin–Sanctuary Point, Batemans Bay, and Bathurst.
Rental market tightens as vacancy rates fall
Rental conditions in regional Australia strengthened over the quarter, with vacancy rates dropping from 1.8% in July to 1.5% in October. Forty-one of the largest 50 regional markets saw lower vacancy rates, and 11 now have rates below 1%. Port Macquarie, Victor Harbor–Goolwa, and Forster–Tuncurry all reported particularly low vacancy.
Forty-five markets posted quarterly rent increases, led by Launceston at 3.8%. Other notable rises were seen in Morisset–Cooranbong, Lismore, Geraldton, Tamworth, Kalgoorlie–Boulder, and Albany. Only five markets recorded a fall in rents, with Albury–Wodonga down 1.3%. All 50 markets saw annual rental growth, with Albany and Busselton achieving double-digit increases.
While regional yields remain higher than those in the capitals, the faster pace of value growth has seen gross rental yields edge down to 4.3% in October.
Affordability to underpin demand into 2026
Ezzy said affordability is expected to remain a key factor for regional property markets into 2026, with demand strongest at the middle and lower price points. Both owner-occupiers and investors are likely to continue driving activity in the most affordable and high-return regions.
“ABS lending data shows that a record level of investor interest is emerging alongside consistent demand from first home buyers and subsequent buyer households,” Ezzy said.
“That will continue to have a flow on effect in regions offering accessible price points and strong returns which could translate into shorter selling times and more modest discounting in areas where stock is tightest.”
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