According to CoreLogic’s latest Housing Chart Pack, regional dwelling values grew by 1 per cent over the rolling quarter, while capital cities experienced a decline of -0.7 per cent.
The data reveals that 72.6 per cent of regional suburbs recorded value increases over the three months to January, showing strong momentum in these markets.
The divergence between regional and capital city performance has become more pronounced, with capital cities seeing broader declines.
Sydney and Melbourne have been particularly affected, with three in four Sydney suburbs and nine out of ten Melbourne suburbs recording quarterly value drops.
CoreLogic Economist Kaytlin Ezzy said there were several factors driving this trend.
“After underperforming the capitals through much of 2023, the regions have regained much of the affordability advantage, with the capital city premium widening by around $50,000 over the past two years to around $240,000 in January,” Ms Ezzy said.
The shift towards regional areas appears to be more than just a temporary trend, with remote working arrangements continuing to influence buying decisions.
“We’re almost five years on from the onset of COVID and it appears that remote and hybrid working arrangements are here to stay.
“With more people able to prioritise lifestyle over job location, the flow of internal migrants to regional markets has settled higher than the levels seen pre-COVID.”
She said the national property market has shown interesting patterns in different price segments.
The affordable end of the market has dominated growth, with lower quartile values increasing by 9.4 per cent over the year, compared to just 1.5 per cent in the upper quartile.
Ms Ezzy said the rental market is also showing signs of change.
“Australian rents were up 4.4 per cent over the year to January, which is still more than double the pre-COVID decade average of 2 per cent,” she said.
“However, rental growth is expected to slow significantly in the first half of 2025.
Sellers in both regional and capital city markets are having to be more flexible with their pricing expectations.
“Across the capitals, vendors offered a median discount of -3.5 per cent over the three months to January, while the regions’ three-month median vendor discounting rate expanded to -3.8 per cent,” Ms Ezzy said.
“Cash-strapped buyers are looking further afield for more affordable markets, and with demand skewing towards the more affordable end of the market, it’s not surprising to see value growth shift away from the capitals towards the regions.”
