Australia’s Regional Markets: Prices and Rental Rates


Property prices in regional areas and cities across the country saw incredible growth in 2021, but will it continue? 

With the financial year now wrapped up, it's time to assess what we expect for the remainder of 2022, and regional property prices are certainly an exciting sector. 

Up to May 2022, year-on-year growth in regional cities can only be described as incredible. While some such as Gold Coast and Sunshine Coast were to be expected, it was the Hunter Valley and Southern Highland regions that truly outshined the rest surprising much of the country. 

Although most regional areas had tremendous growth, it was regional areas of NSW that topped the list. The Hunter Valley and Southern Highlands were at 34% and 33%, respectively. Others that made CoreLogic's top ten list were Central West, Mid North Coast, the Riverina, Newcastle & Lake Macquarie, the Illawarra, and Richmond-Tweed.  

Much of this growth was fuelled by low interest rates and remote work, making it possible for higher-earning individuals to make a move away from Australia's capital cities. These high internal migration rates have been of both home buyers and renters, creating a strong demand for regional housing. However, those who left and are now likely to return to the cities are mainly renters and unlikely to impact regional pricing or stock availability.

While property owners in these areas have benefitted hugely from price growth, there are signs that growth is beginning to cool off. The current growth rate in NSW is three times slower than the end of 2021, and economists at Domain and CoreLogic are blaming affordability. 


The reality of our economy is that regional areas can only support this level of growth for a short period of time before residents' incomes can no longer keep up. As should be expected, some, if not many, of these regions are nearing the end of their price cycle. 

With the recent increases in interest rates, affordability for buyers will become an even more significant hurdle. Borrowing capacity will be impacted, ultimately thinning the buyer pool and forcing some buyers to look at lower price points. 

While we anticipate property price growth to cool and perhaps take a slight dip over the remainder of 2022, that does not appear to be the same for rental pricing. Over the past year, the cost of renting a house soared by an average of 21.2% in capital cities, and regional Australia mirrored this growth with record-breaking rent increases. As a result, many of Australia's regional cities have found themselves in a rental crisis. 

The increase in rental rates in regional areas didn't start with the pandemic-driven migration shifts. In the past decade, regional unit rental rates have seen stronger rent growth than capital cities. According to CoreLogic's Research Director, Tim Lawless, rent growth will continue, driven by a combination of demand and lack of supply. There just has not been enough investment focus in these areas, leading to an arguably less elastic market environment with low levels of stock coming to the market. 

Investors looking for their next investment might want to consider shifting their gaze from capital cities to explore opportunities in some of Australia’s regional centres with booming rental demand.