Is the regional boom here to stay?
The pandemic-era tree change might be done and dusted, but Australia’s regions are still outperforming the nation’s capital cities.
According to data from CoreLogic, Australia’s 50 largest non-capital Significant Urban Areas (SUAs) are markedly outperforming the capitals, in a sharp deviation from pre-COVID trends.
“Outside of the pandemic growth between 2020 and 2022, the outperformance of the regional markets relative to the capital cities is a fairly new phenomenon,” said CoreLogic’s research director, Tim Lawless.
However, Mr Lawless was quick to note that the trend is “attributable to a slowdown in capital city growth rather than an acceleration in regional growth”.
The three months to January 2024 saw the combined regions grow 1.2 per cent, as opposed to the 1 per cent growth seen in Australia’s combined capitals.
Growth was particularly impressive in regional Western Australia, with the coastal towns of Albany and Bunbury seeing quarterly growth of 7.7 per cent and 6.2 per cent respectively.
When it comes to annual growth, double-digit figures were seen in Bunbury, Western Australia; Bundaberg, Queensland; and Rockhampton, Queensland. Only six SUAs saw double-digit annual growth, a far cry from the soaring growth rates seen during the height of COVID-19.
Mr Lawless explained: “The strongest growth conditions have been skewed towards regional areas of Western Australia and Queensland. These areas have a diverse economic base and are generally supported by a mixture of agriculture, tourism, ports and mining.”
He noted that Western Australia and Queensland are “the only states with a positive rate of interstate migration”.
Looking forward, Mr Lawless predicted that the strongest regional markets will be “regional cities in 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,” stated Mr Lawless.
As well as outperforming capital cities in terms of price growth, regional markets are also seeing higher growth in terms of rental rates.
Over the three months to January, CoreLogic’s regional rental index rose 2.3 per cent versus just 2.1 per cent in the capital cities.
As in house price growth, the West Coast came up trumps, with strong growth seen in Albany, Bunbury and Busselton.
Gladstone and Mackay in Queensland were the only non-Western Australian towns to see double-digit rental growth in the past 12 months.
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