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Beyond the capitals: Regional boom defies national headlines
As the national market endures a downturn amid softening conditions, the regions have been the exception, driving strong growth and presenting numerous opportunities for investors.
Regional property markets are continuing to outperform the capitals, with strong growth opportunities for investors who look beyond the broader headlines.
Discover Buyers Agency principal, Kane Dury, said that despite reports about the market softening and buyers waiting on the sidelines, data on locations beyond the capitals suggested otherwise.
While overall values fell in June as a result of Sydney and Melbourne prices slipping, Dury said regional Australia was outperforming capitals on almost every measure.
“Those two cities alone carry so much weight in the national figures that they can drag the headline number down even while dozens of other markets are doing well,” he said.
Cotality’s latest data showed national dwelling values fell 0.4 per cent in June, the sharpest monthly fall since December 2022.
Meanwhile, combined capital city values slipped 1.3 per cent over the June quarter, led by Sydney (-3.2 per cent) and Melbourne (-2.6 per cent).
Over the same quarter, combined regional values rose 1.1 per cent, while they were up around 11.8 per cent over the year, ahead of the combined capitals at 7.8 per cent.
Dury said when investors made buying decisions based on a national average, they were “flying blind”, compared to the opportunities that emerged when they considered fundamentals in individual suburbs.
He said vacancy rates, days on market, the ratio of owner-occupiers to renters, listing volumes, local population growth, and the diversity of the employment base mattered more than broader national figures.
In the regions, vacancy rates sat around 1.5 per cent, supported by people migrating after being priced out by the capitals, and a chronically constrained new housing supply.
While higher interest rates and new investor tax policies had knocked confidence in the big cities, Dury said they hadn’t changed fundamentals in the regions, where too many people were chasing too few homes.
“The centres performing best aren’t one-trick mining towns either. They’re genuine regional cities with multiple economic engines like health, education, defence, agriculture, ports, logistics, and manufacturing,” he said.
“They also have growing populations and deep pools of owner-occupiers. That’s what makes the growth durable.”
According to Dury, there were six key suburbs showing strong rental demand and economic diversity for buyers in the $700,000 to $1 million bracket, with established homes presenting the most value.
Ultimately, Dury said every buyer’s situation was different, and the right centre depended on their strategy, budget and timeframe, but noted the window of opportunity wouldn’t stay open forever.
“The rest of the country will eventually read past the headlines and the buyers who act before that happens will be the ones smiling in five years’ time,” he said.
Here are Dury’s top picks:
Toowoomba, Queensland
Dury said Toowoomba had recorded double-digit annual growth, with an economy spanning health, education, agribusiness, and facilities like the Wellcamp airport and logistics precinct, and established homes on big blocks still available under $800,000.”
Townsville, Queensland
One of the fastest-growing markets in the country over the last year, Dury said Townsville was underpinned by defence, the port, health, education, and major energy projects.
The median house price sits around the mid-$700,000s, delivering value for the northern Australian region.
Mackay, Queensland
In Mackay, Dury said health, marine, agriculture and services jobs supported a market with ultra-thin vacancy rates and where established housing remained firmly in the sweet spot.
Geelong, Victoria
Dury said Geelong had an economy spanning health, education, advanced manufacturing, as well as genuine lifestyle appeal.
“Quality established homes remain accessible around the $700,000 to $900,000 mark – something Melbourne buyers can only dream about within 10 kilometres of their CBD,” he said.
Bendigo and Ballarat, Victoria
Dury said as Melbourne softened, investors seeking value were already weighing up their options to head north to Bendigo or Ballarat.
He said the regions offered hospitals, universities, government employment and strong commuter links, with established period homes still available between $600,000 and $700,000.
Wagga Wagga, NSW
With a strong economy and a tight rental market driving rents and prices higher, Dury said Wagga was a prime market to buy.
However, he warned investors against purchasing new builds, sold at a premium with commissions built into the price, as they were the worst-performing properties.
“Established homes in proven suburbs, close to the hospitals, schools and employment hubs, are where the scarcity is, and scarcity is what drives growth,” he concluded.
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