Regional Australia: A varied picture for values, rents, and yields

Housing values in regional areas of Australia are growing faster than home prices in Australia’s capital cities.

However, it's an uneven picture across the country, with some regions streaking ahead and others going backwards.

CoreLogic’s latest Regional Market Update shows home values in regional Australia recorded a quarterly increase of 1.2% in the three months to January 2024, compared to an increase of 1.0% in the capital cities over the same period.

The regular publication analyses value and rent changes across the country's 50 largest non-capital Significant Urban Areas (SUAs). 

CoreLogic’s Research Director Tim Lawless says that it’s unusual to see the regions outperforming cities when it comes to price growth.

“Outside of the pandemic growth between 2020 and 2022, the outperformance of regional markets relative to the capital cities is a fairly new phenomenon,” he says. 

“The more recent trend where growth in regional housing values has outpaced the capital cities is attributable to a slowdown in capital city growth rates rather than an acceleration in regional growth.”

Areas of growth…

Many of the standout performers in the latest CoreLogic Regional Market Update are in Western Australia (WA) and Queensland (QLD).

The WA coastal towns of Albany (7.7% - median price $529,980) and Bunbury (6.2% - median price $532,054) recorded the highest quarterly rises, followed by Lismore (5.5% - median price $477,066) in northern New South Wales (NSW) and Townsville (4.7% - median price $416,966) in QLD's North.

Although these are astounding growth figures for just three months, the annual numbers paint a story of more moderate growth, showing that only six regions of Australia recorded a yearly increase of 10% or more.

Unsurprisingly, all of these were in WA and QLD.

They include Bunbury (15.8%) in WA, and Bundaberg (12.0%) and Rockhampton (12.0%) in Central QLD.

“The strongest growth conditions have been skewed towards regional areas of WA and Queensland,” Tim Lawless says.

“These areas have a diverse economic base and are generally supported by a mixture of agriculture, tourism, ports and mining.” 

Mr Lawless says WA and QLD are “the only states with a positive rate of interstate migration that helps support housing demand and they’re relatively affordable markets.”

Areas of decline…

Tasmania (TAS), Victoria (VIC) and the south coast of NSW dominate the list of falls in home values. 

The Tasmanian cities of Launceston (-2.3% - median price $516,904) and Devonport (-2.0% - median price $438,445) recorded the largest quarterly falls. 

“The weakness across Tasmanian housing markets is broad-based but follows a solid run of growth with values up 91% over the past decade,” Tim Lawless says.   

“A combination of affordability constraints following the pandemic surge in values, negative interstate migration and a normalisation in internal migration rates are other factors that are likely contributors to the softer conditions across Regional Victoria and Regional Tasmania.”

Annual declines were recorded in 11 regional markets across VIC, TAS and NSW, where the south coast town of Batemans Bay (-5.8%) had the largest annual decline.

The rental picture

CoreLogic says its regional rental index recorded a 2.3% increase over the three months to January.

This was up from a recent low of 0.4% over the September quarter of 2023. 

By comparison, capital city rents rose 2.1%, up from 1.7% the previous quarter.

Thirteen of the largest fifty non-capital city markets saw rent rises of three per cent or more.

Coastal WA led the way once more, with weekly rents up in Albany (6.3% - median weekly rent $492), Bunbury (4.6% - median weekly rent $597) and Busselton (4.6% - median rent $686). 

CoreLogic says this is equivalent to an increase of between $25 and $30 to the median weekly rent in these towns.

It was a similar story when it came to annual rent growth with Bunbury (14.8%), Busselton (12.7%), Geraldton (12.1%) and Albany (11.2%).

Two other regional markets also recorded annual rental growth of over 10%, Gladstone (11.6%) and Mackay (10.4%) in QLD.

At the other end of the spectrum, Batemans Bay in NSW recorded the weakest growth, with rents dropping -1.8% over the quarter to a median of $520 per week.

This was followed by Goulburn, southwest of Sydney, with a fall of -1.4% to $457 per week.

Batemans Bay also recorded the highest annual decline in rents, falling by -10.2% over the year to January.

In terms of rental yields, mining regions continued to dominate, with Mackay (QLD), Geraldton

(WA), and Gladstone (QLD) recording gross yields of 6.6%, 6.5% and 6.4%, respectively.

Final thoughts

Going forward, CoreLogic’s Tim Lawless believes demographic trends, migration patterns and localised economic drivers will be key to the direction of regional housing values in 2024.

The pandemic saw regional property values initially soar, particularly in coastal locations, as many Australian city-dwellers decided to head to the beach to work, play, and isolate.

While Tim Lawless believes remote working is at least partially embedded in many Australian workplaces, he says it’s unclear how work-from-home policies will evolve over time.

Meanwhile, he points to what he expects will be price growth in regional cities in what he calls the 'sweet spot', “offering commuting options to a capital city, a lifestyle dividend, and affordable housing.”  

“In contrast, the performance of more remote regional markets will hinge on local economic factors, with infrastructure projects impacting housing demand, and climate, weather, currency flows, and policies affecting farming or coastal areas,” he says.