Regional Market Update: Regional property values out-perform capitals once more - John McGrath

I’ve closely observed Australia’s regional property markets for years, and it looks like 2026 will bring some more big changes to these areas.

It’s been pretty interesting to see how our regions have become the one and only place to be for hundreds of city buyers recently. The latest Regional Movers Index found capital-to-region migration accounted for 11.5% of our biggest relocations in the September 2025 quarter. In comparison, region-to-capital moves totalled just 8.4%.

The regional attraction include generally lower values than city counterparts. Government-funded projects are also improving many of these towns’ infrastructure and amenities.

The move from onsite to work from home and hybrid employment is strengthening the appeal of regional and rural locations. So too, is the appeal of a quieter, more relaxed lifestyle.

Cotality’s quarterly Regional Market Update showed regional location values overtook capital cities for the first time since August 2025 – a month when they had already achieved a nine-month run of dominance against the capitals.

Regional dwelling values lifted 3.2% over the three months to January, compared with 2.1% across the combined capitals. This notable growth followed another positive shift in the three months to October 2025, when our regions achieved the highest rate of combined growth in more than three years.

According to the report, combined regional rents are also rising faster than those in capital cities. Rentals increased 1.6% over the quarter and over the past five years, have gone up nearly 42%.

Meanwhile, regional Western Australia was the strongest individual state or territory performer, posting a 6.1% uplift over the quarter, up from 4.9% previously. Its gold-mining centre, Kalgoorlie, continued to appeal to capital city buyers with values increasing 18.8% in the year to January, and 7.6% in the last quarter, to reach a $429,575 median.

But in the list of long-term, in-demand regions, it was Wagga Wagga in NSW’s Riverina area that stood out in the Regional Market Update. Home to around 70,000 people, and located 250km west of Canberra and 130km north of Albury, Wagga Wagga was Australia’s strongest individual property market in the January quarter. Properties are now selling for a $665,026 media, after dwelling values increased 8.1% in the quarter, and 14.9% in the past year.

Overall though, values in NSW’s regional areas, along with those in Victoria, remain largely unchanged, after muted achievements in the previous quarter. Both states featured the nation’s only localised declines including NSW’s Bowral-Mittagong (-2%) and Batemans Bay (‑0.4%) and bayside Warrnambool in Victoria (‑0.4%).

So, what’s next for our regional towns’ property markets?  Based on the last few years, or even the last quarter, I suspect inland towns, such as Wagga, will continue to out-perform capital cities. And, as vacancies remain tight for regional renters, rents are likely to rise faster too.

Equally, I wouldn’t be surprised if property markets in Western Australian and Queensland rural centres further exceed expectations. Government-funded projects will help to advance these areas’ positive outlooks too. I’m certainly looking forward to what this year, and beyond, will bring to Australia’s regional property markets.